The Quiet Light Podcast

Ben Carpel has purchased two of the largest listings from Quiet Light Brokerage in the last six years. One is a SaaS business, the other a publishing site. In this episode of the Quiet Light Podcast, Ben shares how he raised funds and beat out multiple offers in both transactions. In his pre-entrepreneurial life, Ben was an institutional investor. He sourced deals and made business investment decisions as part of a larger investment fund. At the time, he played no role in the management of the businesses purchased. Over time, Ben made the conscious decision to move into the digital space where owning and operating the company entirely would be his new role. He did this through raising funds, negotiating professionally, being likeable, thinking about others, and never over-promising and under-delivering. If you want to raise funds, be a better buyer for yourself, for your investors, and negotiate and win on competitive deals, this Podcast episode is perfect for you. Episode Highlights: [0.32] Who is Ben Carpel [3:40] Are the multiples higher or lower in the online space? [5:32] Three Steps to winning in multiple offers scenarios. [9:07] What two buyers stood out in Joe’s own transaction. [11:04] What makes Ben a great buyer that sellers love to work with. [14:59] Why doing what’s best for the seller is important. [16:10] Does being a “nice guy” help or hurt? [17:03] How to raise money. [20:09] Why being open and honest matters. [22:07] Get your “money” involved early on. [24:42] The upside of things going sideways. [26:14] Why managing communications is critical. [27:59] Don’t do this…it kills relationships. [31:14] What will win in the long run. Transcription: Mark: Whenever we do these podcasts we’d like to have a nice clear hook that we want to kind of tempt listeners with. Something that you’re going to learn, something that you’re going to pull away from this episode and a real actionable item but sometimes it’s really just good to sit down with a buyer who’s been super experienced, has a proven track record of doing really really good work and have been successful in what they’re doing and today we have that sort of a guest. Joe, you sat down with Ben … is it Carpal or Carpel or do we know? Joe: You know what I think I say I’ve been saying Carpal for years but it’s Carpel. We’ll let him pronounce it properly and just go with that instead. Mark: We really need to improve in this part of our podcasting career. We should stick to brokering. All the same Ben we won’t rank as far as how much different buyers have bought from us but Ben is the definitely one of our top five all time buyers as far as what he’s done through Quiet Light Brokerage. And you spent some time talking to him about how he’s financing some of these deals, how he has been [inaudible 00:01:40.7] money and also just some of the things that we can pick up [inaudible 00:01:45.1] we can pick up from somebody who’s done as much as he’s done. Joe: Yeah if anyone out there listening is thinking about making an investment in a web based business they should listen to Ben’s approach. Because it just makes me, the broker, want to work with him more and more and more. He’s easy to work with. He’s always trying to under promise and over deliver. He’s continually giving updates. And he thinks first about the seller, trying to make the deal work for them. Naturally, it’s got to work for him but he doesn’t mind overpaying for a great business that has incredible growth opportunities. He comes from or came from years ago the larger investment banking world where he worked for a company Family Fund and they would buy larger manufacturing companies. He took a lot of what his mentor shared with him there and brought it over into his own world which is him working from his house and running two now multimillion dollar businesses. He’s bought them both from me, purchased two or three others along the way but it works. He’s got a system in place and a process in place and one of the most important, we’ll touch on it, I won’t give away too much but it’s when he has money behind him, an investor he brings that investor into the mix early on. And with a business that he bought recently we had multiple offers and Ben made the choice to bring the investor in on the original conference calls with the seller and that sealed the deal and that’s why he was chosen over the other two. Mark: That sounds great. Well, again I think these conversations are super useful for anyone that is interested and just kind of been a fly on the wall. For somebody that’s been there done that and done that well. So why don’t we go ahead and get to the interview and see what we can pick up? Joe: Hey folks it’s Joe Valley at Quiet Light Brokerage and today I have got a very special guest. It’s Ben Carpel. Ben is a buyer and he’s actually bought two of my largest listings. One for just under nine million dollars, another by my math just under four-ish. But that’s just my math; it all depends upon how you work it out. Ben thanks for joining us on the podcast. Ben: Thanks for having me Joe. I’m happy to be here. Joe: I’m glad you’re here man. Hey, listen I would love for you to tell your story. Let these folks know who you are. Give them a little bit of background on yourself if you wouldn’t mind. Ben: Perfect. The quick overview is a Midwest guy born in Minnesota actually where at Quiet Light is based, where Mark is based. And I grew up kind of in the investing world actually a little bit. So I was doing institutional investing. And what I mean by that is I was an investment professional. So I was a sourcing, negotiating, structuring, evaluating deals always though in the context of managing someone else’s money. So myself, my former colleagues we are there to make investment decisions for investors in a fund, [inaudible 00:04:38.0] fund. And about six years ago now, seven or eight actually maybe closer to it I was at a place that invested in a lot of growth companies, a lot of growing businesses and small businesses and the trend I saw was it was entrepreneurs of all shapes and sizes. And I knew Joe since I was a little kid like I knew I kind of wanted to always have that operator and that entrepreneurial role. I just didn’t know when or how or when or why or what it was going to entail all those big questions. And I knew at a certain point it would happen so I kind of I guess really it was these digital acquisitions, the digital businesses that made my switch purely looking at investments into more okay now we have to deal with operations. So I wanted that, I wanted to seek out … we have customers to deal with, we have vendors and suppliers to deal with, we have strategy and marketing sales to think about. Whereas in an investment world you’re thinking about that but you’re more disconnected from than the actual operations in the business. So like I said about six years ago we were seeing … again a lot of people that had started businesses of all shapes and sizes, all different industries and I was inspired by that and I wanted to get into that. And I knew I think location independence especially now in 2018 is a big thing for a lot of us and I knew a web based or digital based businesses can be a path for that. Currently, I’m based in the West Coast but open to living and moving … we’re all over, I mean I know a lot of your buyers come from all over the place and I think it’s a big advantage that Quiet Light deals and box the table consistently. What I’ve seen, what we’ve been on, there’s a location independence factor to it. So it’s a big plus for me. You can kind of put roots where you need to be for your kids or your family or your friends. You can choose to live and work where you need to be. That’s been the case of the businesses you and I have worked on together as well the one that’s been sold. Well, my ramble just ended but the short version is former investor turned I guess operator via high quality Quiet Light deals. And I got the chance to put my investment skills to work and do the things I craved in sales and marketing and customers and vendors. Joe: That’s interesting from your former investment world where you were the investor in an institutional sense did you find that the multiples were much higher than what you’re looking at in this online world than with a deal in the operator space? Ben: Yes, very very much the case and it still persists to that day. So for the past decade, it’s gone up and down a little bit depending on the broader economy and depending on supply and demand. But I can consistently say that when you’re buying or when buyers and sellers are negotiating in the standpoint of maybe a traditional brick and mortar business such as a legit manufacturer or factory manufacturer if you will those multiples, or a distributor, or a wholesaler, a publisher whatever it may be they tend to be higher. And so what’s great for buyers in this space and buyers looking at Quiet Light deals is they can … I would say affordable … relatively more affordably put their business acumen to work without having to invest in say real estate or the public stock market or private businesses at this fund level. So you can get a little bit … by definition, they’re going to be smaller businesses and so there’s more risk than buying into the S and P or an apartment building or whatnot but if you are really willing to put the work in and evaluate properly and operate properly I think the payoffs can be really attractive from a buyer perspective. And then from a seller perspective too I mean they’re working with you guys and you’re giving them sage advice, you’re giving them a quality just advisement of what to do. It’s a path now that you didn’t use to be I think 10, 15 years ago especially. If you’ve created a digital business or an online business what are you going to do with that? How are you going to monetize it? But now Quiet Light becomes a path for sellers to exit something that might otherwise be a very illiquid investment. Joe: Got you. So with each of the transactions that you’ve purchased from Quiet Light and from me specifically Ben you’ve been in a situation where there have been multiple buyers. You’ve had to compete with other buyers that approached it and maybe pushed the value up against your offer. Ben: Yeah. Joe: Can you talk a little bit about how you approach making offers and putting structures together and how you work with the seller in terms of making the deal a win-win for both of you guys? Ben: For sure. That’s a great question and as a buyer, you often don’t know what the seller … the Quiet Light and the seller have all the cards and know what’s going on but for me, I think it’s two maybe three things. And the first is personality, the second is about just being upfront and clear managing expectations, and the third and is professionals. So I’ll touch a little bit on those. So the personality I think in a situation where you and your clients are having two or three or five or 10 or how many bids at the end of the day the numbers are going to start to blend together a little bit but there’s a big … I think it’s beyond just the number on the paper. There’s a reason a buyer chooses to look the seller and vice versa. There’s a reason a seller looks in the buyer. Sometimes the personality fit is a big deal because it’s this dance of going from two complete strangers you right there in the middle of managing everyone expectations and the end of the day it’s two people having to work together in a transition for a few months and so you can’t have two completely [inaudible 00:10:11.17] personalities. So I think a big … it’s us being kind and considerate but as well as getting that same vibe from the seller too. So that’s a big part of it. Second I talked about communication upfront. I think it’s always been really important from the start to manage expectations and communicate even if it’s disappointing blips of information here and there that we have to communicate. As you know Joe we’ve done these very stressful emotional sales and so for me what I’ve always done is to have empathy and put myself in the shoes of a seller and know what would they want to know, what do they … might be thinking. And as you know there have been times where in a stressful process we’ve had to deliver news that wasn’t the greatest but the main thing is if we’re communicating that and we’re being clear about it I think that’s a big positive for you and your clients to hear. And finally is the professionalism, I think that was I think a big part of what I learned from my … it’s I’m grateful to my former bosses and colleagues in learning that skillset. It’s not just a buyer trying to get the lowest possible price and extracting value and punishing a seller for … because every business out there is going to have positives and negatives and so I can’t sit here and talk only about the negative in order to drive down price and value. I approach it as a professional it’s like we’re here to … everyone is incentivized to get a deal done, the seller, you, the buyer. And so for me, it’s not about knocking down the flaws or the weaknesses of the business, it’s about being professional and understanding and valuing what the seller has done and the hard work they’ve put in to get a business you’re interested in. So it’s the personality that kind of jives with that too but it’s just being very clear, very communicative, very professional and not trying to take advantage of the seller. Because that’s not what it’s about at all if you have to pay market a little higher if that’s the end of what gets the business to you end of the day you know that’s what’s going to be valued by you and your client. Joe: Yeah let me touch on this just for those buyers out there that are wondering how do you compete with an all cash fire? How do you compete with other buyers when there’s multiple offers? Everything Ben just said is absolutely on target. And I’m going to talk about it as if I was a seller because I have been a seller. When I sold my business through Quiet Light in 2010 I had five or six conference calls with potential buyers and two stands out. One the guy was just a jerk. This is one that stands out. He was rude, he cut my business down, he didn’t let me finish my sentences and I kept thinking “Why am I even on this call? If he makes me an offer I’m not selling him the business.” I wasn’t going to do it. The other one that stood out was the person that started the call with “Hey man thanks for creating this product line. I’ve actually used similar products and it’s made a huge difference in my life, thank you.” and then he went on. Actually one of the shortest conference calls that I had but he was professional. He was … you used the word kind. He was courteous and he actually ended up buying my business. And I was happy to do business with him. If he had offered me $10,000 less than the other guy I would have taken it. Ben: Yeah. Joe: Simple. Ben: I know. Joe: Because it’s a choice, a lot of the time sellers have choices even when they have multiple offers. And I’ve been in another situation recently not as the seller but as the broker where I had two offers full price 2.3 million-ish and one was an SBA deal one was all cash. The seller chose the SBA deal even though he had to take a 10% note because he really liked that seller. He was going to keep the staff in place, he was going to run the business well, had a … just a good fit. The cash buyer he felt like he was going to be really hard in due diligence, really hard in transition and he just didn’t have time for that in his life. So keep that in mind buyers because it’s really important. Now, Ben, I want to talk … we’ve done two deals together and I don’t want to talk about the … I don’t want to reveal names here or anything like that so we could talk big picture stuff. You’ve heard me say it and I’m not blowing up your ego or anything like that. I don’t think you need it but out of all the deals I’ve done … and I’ve done like 52, 53 million in total transactions now, you stand at the top in terms of professionalism, the way a buyer behaves and acts and I’m always winging people in your direction. There’s a couple of others and strangely enough on the last deal we had like two all-time favorite buyers were making an offer. So it’s really hard. It’s you and the other guy, Matt. Matt, if you’re listening you’re right up there. But on the first deal, we were in a situation where we had multiple offers and it turned out that it was going to be much greater tax consequence to the seller than we realized initially because he had a sequel operation. Can you talk about what you did and how you pivoted to make that work for him if you recall? I know it was five years ago, four years ago can you remember the details? Ben: Yeah I remember that coming up I think towards the beginning, middle of the process and that’s something that is often underrated and it’s maybe this is an inflection point probably if you have a business as a seller that where you have to think about the tax implications of depending on the corporation but I think that’s maybe on the scope of what we want to talk about today. But I remember for us it came down to just being willing to accommodate the seller’s desires as it relates to the tax. So it was a little bit less favorable for us from the buy side but it’s still got us the business. I mean at the end of the day again you’re lining up offers, Joe and this seller is looking at everything and comparing everything. It’s a competitive situation and tax can be a big part of that when it comes down to all the fees that come out and the taxes that come out there’s a net cash. So for us, we were willing to say okay let’s do something that benefits the seller because it’s going to help nudge across. So from … you know as it relates to this, the structure that’s going to be unique because when you’re selling a business the business has been formed years ago there’s not much you can do to look in the past but when that exit happens there’s typically … it’s a stock or an asset sale and is there the willingness on the other side of the Quiet Light table, is the buyer willing to work with you that maximizes the value. And for some buyers it may or may not make sense. I would say based on that transaction in the digital world as well as what I’ve seen in kind of that institutional world, typically more often than not if you’re a seller and you’re working with Joe buyers should be willing to come to the table in terms of needing what you would like and how you would like to structure that transaction. More often than not buyers will accommodate the seller, not always because there’s sometimes going to be a unique quirk to a particular business. But again those are nuances that aren’t even willing. And that’s tax experts and legal experts that think about tail risk and stuff. Generally speaking of a buyer like myself or a digital buyer is going to be willing to work with you so it shouldn’t be a big fear in the seller’s mind I think. Joe: Yeah and I agree and as you said you work around the situation so that benefits both of you. There have been situations in the last six years where I’ve had a buyer in due diligence try to take advantage and discount the price because of a certain situation. Everything was 100% laid out exactly as it should have been, there were no surprises but they felt as though now that they have them under a lot of intent they’re going to try to pivot and reduce the price and it’s just not the way that we work. Everything is fully disclosed up front. And in your situation I specifically recall there was a change in the structure; it benefited the seller. It helped him out and you were okay with that. It might have cost you an extra dollar or two or a thousand or two whatever the number might have been but in the long run, it got you the deal. It closed the transaction and I believe it’s worked out fairly well for you correct? Ben: Yeah exactly and when you look back at the tax and you calculated it it’s something where if you’re a bidder and you’re a buyer and this is your goal to take over business and own a successful business this is a new show of the deals is the tax implications. So unless there’s a particular quirk or nuance to a business because there’s a liability or there’s something unique about it I think it’s best to work with Joe and his clients in doing what’s best for the seller. This is a … it’s again it’s a big decision for them, it can be life changing, it’s emotional more often than not and when it comes to these details they can matter. So yeah in the end as you just perfectly illustrated Joe that worked out best for him at the time and for us going forward. Joe: I just have to repeat some of this Ben because it’s … I know I should be so obvious, for those listening, buyers this information is coming from someone that has spent over 10 million on transactions. It’s not I made a $100,000 $200,000 purchase, each situation Ben has been in with me and with Quiet Light it’s been multiple offer situations where he’s negotiating up against someone else and has bought the business by being a nice guy. Ben: Yeah. Joe: And thinking not only about himself but about the seller as well and he’s gotten the deal done. The first one worked out great. Let’s talk about the second one because you are not even 30 days in at this point right? Ben: Correct. Yeah exactly. Joe: So this particular business and again I’m not going to name names, not going to talk multiples or anything like that but I want to talk deal structure on this one in terms of funding. Because we had a situation where it was going down one pass and then we had to pivot. Ben: Yeah. Joe: And I was comfortable with pivoting because it was you. You had set up an alternate path just in case this one doesn’t go I’ve got this one ready. And it took a little bit longer but it worked out both for you and you know what the business is growing so fast that the seller got to keep a whole bunch more money because he got to keep it for an extra 30 days. But let’s talk if you will a little bit about how you come up with funding. How do you structure a deal? Where do you get … unless you’re sitting … are you sitting on millions and millions of money in your account? Ben: I wish, if I would we’d be doing this … I will love nothing more just to podcast all the time and do this all day long. Hopefully in the future but no I’m not. Joe: So you’re using other people’s money. Ben: In this case yeah. Joe: Where you … you know you learned about that from the investor world so let’s talk about that with someone that is new to this and may have a few hundred thousand to invest and is looking to buy a five million dollars business. How the heck do they do that? How do you do that? Ben: Yeah so first and foremost guys if you hit that situation know that there’s going to be some stress because you’re managing expectations for Joe, for Joe’s client, for the fund that’s backing you, perhaps for a bank that’s backing you in the fund. There’s a lot of juggling. There’s stress for Joe and the seller side and there’s stress for you. So that’s going to come up no matter what but how does that come about? You know just like almost anything private, it could be a real estate deal, it could be a restaurant or a bar, it could be a zone project, it could be a private business. There’s … if there’s I wouldn’t say the word lucky but if you have a history with someone you know has capital behind them that puts you in a spot. But even beyond that you’d be surprised at the amount of just average guys … I was, I came up in and a pretty regular background and it shocked me out that there’s a fair amount of people that just work hard and save their money and if you can tell a compelling story of why you should do a transaction with Quiet Light there is going to be a lot of support for you at that deal. But taking it back to the specific example that Joe and I worked on together the stress for me was … and you know I like to think and I as I said in the beginning of the call I like to have empathy. I like to have professionalism. And that means doing things with honor, so, for example, it was the capital of a former boss of mine they were very interested in the deal, full support. And from the start, they said okay don’t show this to anyone else I want to back this deal. You work with Joe you’ve been the face of it. I want to put my capital work. That was it pretty much right Joe? It kind of … not only that but it wasn’t just me, I also wanted to introduce that person to Joe and Joe’s clients such that they had a face. Joe: And let me let me say right now, no names again; that sealed the deal for you. Again we had multiple offers in the situation and what you did was you brought in the money into the conference call with the seller. And so myself and the seller felt much more comfortable when you were bringing in other people’s money that those people got on the call, asked really professional questions, were professional, had the same kind of demeanor you did. And we just really liked them. It just made a difference for us and liking who you’re doing business with it kind of matters. Ben: That matters a lot, yeah. Joe: Because as you said there’s a lot of stress, this is for the person that’s selling the business it’s often … can be a lifetime event sale and they’ve got other people that they’re promising things to and taking care of and over promising and under delivering is never what people want to do. Ben: Exactly. Joe: You do that very well so that particular buyer, the money though it disappeared on us. Ben: It disappeared and the frustrating … the infinite frustration that I had to bear during the process and the recommendation of how to avoid that is perhaps a representative of what their money is. I knew from the start I could have made two or three or four called, this was my background and there would have been backing but I out of respect, out of honor when that person said Ben don’t show this to anyone else I took them at their word I said fine. Knowing that in a rare event when rarities happen, it happened, they decided to back out. I was going to have to scramble and completely restart not only my process but Joe’s time and his client’s time. And that was going to be frustrating for them, it was going to be frustrating for me. Now I had confidence so I’d still be able to but I knew we’d lost a good six weeks of hard work from everyone’s part. So the first thing yeah, the first piece of advice I have if you’re using other people’s money, if it’s a rich uncle, if it’s a rich fund, if it’s cobbled three or four people I would say always the money man, the person with the account the big account get them in about there; have them meet the seller. As Joe said it makes a big difference rather than you just saying I’m an agent on behalf of someone else, I’m representative, I’m an executive on behalf of someone else; in this world, it makes a huge difference. The second piece of advice as Joe just said is if you’re really serious and you are the guy passionate and wanted to do the deal it matters that you want to have your ducks in a row and potentially have a contingency plan as I did should that first fall through. Now like I said I had put my own self in the scramble due to how I do business and that was respecting them saying I’m not showing it to anyone else, we’re going down this buyer path together and they backed out. They kind of put me … and as Joe you know they profusely apologized and felt bad for you, they felt bad for me, they felt bad for the seller. Joe: They were very professional. Ben: Yeah, they knew the implications of whatever analogy they want to use they knew the pile of what that they have put us all in. Joe: Yeah. Ben: But I think you sensed it, Joe and I think the seller sensed it that I was so determined for it to not abandon, not under deliver that I was doing … willing to do almost anything to make sure the deal would conclude and [inaudible 00:25:32.5] which it did. And it actually had a fairly favorable outcome because I was personally willing to give up a few things in terms of escrow, in terms of amount that they were a little bit more I would say not stripped down but more … their world was a little bit more maybe weighted to the buyer and I was more empathetic to Joe and Joe’s client. So it ended up being a win. They had … Joe and Joe’s client had … they waited an extra month but it ended up being worth it to them materially on a money perspective. So yeah the advice to buyer’s is bring the money people on early, bring them to the table. Don’t hide them there’s no … you’re not protecting their height, you know there’s no upside to hiding it. Be upfront. Communicate the negative. When we had to do a three way call, it was Joe, myself, and my former colleague boss and they communicated that bad news but we had to. We just don’t want to be sitting here as a buyer or a potential bidder having Joe and his client wonder what’s going on. And then thirdly as a buyer, if you can and you really want that business again have that plan B have that plan C ready to go ready to pull the trigger should something bad in plan A happen. Joe: Yeah. The key thing with the outcome there in terms of communicating the negative and them calling … not just an e-mail but a call and you’re on the line, they were in line and conveyed the message that things went sideways where they were they can’t continue with the deal. The outcome, in the long run, is if you ever call me again and love another listing and ring them in I’m going to listen because they were professional. They called and I’d love to do business with them. I know and you know why they said no to this one, it wasn’t their choice. They had to say no. There was logic behind it to a certain degree but it worked out. Again like you said we pivoted the next step was another person really with the purse strings in a sense and the first thing we did was what? We scheduled a conference call. Ben: Exactly. Joe: We had to instill confidence in the seller of the business that we’re not just dragging our knuckles that the business you still of interest to you and to the other source of funding and so we had a call. We set new expectations and managed them well. You actually gave us at one point daily updates which I think must have been driving you nuts because sometimes there wasn’t much to report. Ben: Yeah, sometimes there’s not much … you guys you know these processes just happen and there’s a process to them. There’s not always a daily update. It’s not like there’s a daily sales report so sometimes you’re kind of like okay this is the most minor thing I ever go put it but again buyers I recommend that communication and not just any communication but as a human being it’s not just a transaction. So the vibe, the connection … it’s the managing of expectations too; good and bad. You don’t want to be in a situation … and of the first business we bought with Joe as I’m the operator of that business that’s how I’ve chosen to run things. There’s … we get dozens of emails a day from our customers who want a product feature, it’s a software company so they want a product feature and always we’re up front and we say we’ll add it to the [inaudible 00:28:38.9] we’ll add it to them both but we can’t promise it a lot of the detail. And that’s I think a big thing as a buyer, you don’t want to over promise and under deliver because it’s not just the client’s time and their hopes and dreams but it’s Joe’s means. He is the gatekeeper, he is the advisor, he’s the one who’s been through this and advised so many big companies and so many professional sellers who have built unique business. You don’t want to waste … as a buyer you do not want to waste Joe’s time if you can. So managing … not just putting out an offer for everything you see, not just doing conference calls for everything you see, really waiting to make the right targeted strike for what’s best for you so that you can judiciously use his time and his advice. And I think that’s a big part is the managing of expectations. Joe: Yeah, the advice I always give is … to buyers, look at his many possible listings that you can so that you know the right fit when it comes along and if you can act quickly. You don’t want to be in a situation where you’re not, you’re sort of looking part time and then you like one and then you have to go find funding for it. By the time you come back if it’s a great business, it’s going to be gone. The other thing you absolutely don’t want to do is be in a situation like Ben said where you don’t bring the money person forward if there’s somebody else that’s doing the funding. Even if you’re doing an SBA deal and there’s two of you putting the 10 or 15% down. We had a situation recently where that was the situation, multiple offers, these two partners were chosen and one of the partners was not on the initial conference call and decided to walk away because of one particular situation which was fully disclosed in the client interview. It’s all there but he didn’t bother looking in advance. So the broker is thinking to himself and he gave the guy advice he said look you can’t have this happen you call me again and if you’re making an offer and someone else is making an offer my sellers are going to say what do you know about the two of them? Ben: Yeah. Joe: The broker is going to have to say well I had a deal with these guys and they just walked away in due diligence, his partner flaked. Ben: Yeah. Joe: The partner is still around yes so you want to be making use of the advisor broker’s time as well. As Ben said we’re all busy, we all have a lot of clients to work with. We work with as many buyers as we do so it’s probably more actually buyers and some of them like Ben is just going to rise to the surface. When Ben sends me an email and has an interest in a listing, I’m like ah man I love doing business with Ben, always works out great, sellers love him and you going to get more attention than somebody that might have walked away on a deal for some strange flaky reason. Ben: Yeah and that institutional lull that I came from originally, that same thing happens where it could be huge huge company but sometimes firms get a reputation for saying one thing and doing another and know that they become the shop where they’re going to … in an LOI they say X Y and Z but you know at the end of the day it’s going to turn out to be something less than X Y Z and it doesn’t work out as well for the seller. And so that reputation sticks and I think from the sell side too. I think from a buyer what I can unilaterally say is both having closed on deals, bid on deals and looked but passed because it wasn’t the right fit. And I say this not because we’re just doing this podcast, but Quiet Light I think you know already has the best digital businesses and web based businesses out there that their reputation speaks for itself. Their ability to conduct, as a buyer too I’ve been talking about professionalism and what you need to do but it’s a two sided coin. Sellers and the sell side needs to be doing the same and I’ve seen situations from other shops where there was not the most scrupulous behavior by the advisor the broker and it burns the buyers a little bit. So it’s a two sided coin and some trust issue and at the end of the day we are all humans and the tiny mistakes are made may be here and there but it’s honesty, it’s communication, it’s a big part of that. I use the word vibe but just the personality fit is what’s going to get things done. I mean there’s no reason to be cold and cagey and do what you can to get … extract value in this transaction. If the business is the right fit for you as a buyer you can pay 95% or 105% or whatever it is around that price and driving down the price and making the seller and Joe angry isn’t going to win in the long run. What’s going to win in the long run is you taking over that business and operating it with hard work and honesty and integrity and all the things that make the customers continue to be happy. That’s if you overpay a little bit or you don’t get them to drive down the price because you’re not insulting them but it gets you the deal that’s a very important consideration. Joe: I think we have to finish it on that right there Ben. That was the best advice I think of [inaudible 00:33:28.9] give potential buyers. Ben: Yeah. Joe: All right listen man, I appreciate your time, I know you’re a busy guy thanks for sharing your time. I look forward … it might be another three or four years before we get into it again but I look forward to it. Thanks so much Ben. Ben: No. Yeah, thanks for your interest and your time too. And thanks for being again you’re the great guy in this space. So I look forward to us working together in two, four years from now. Links: Ben’s LinkedIn Profile Plan your own exit – get an initial valuation

After 10 years in the music industry, Dustin Ray started to hear about entrepreneurs in the tech space and felt the pull towards the flexibility that the online entrepreneurial field had to offer. As Dustin points out, there is no ceiling in the industry – as long you can build something scalable, you can take it as far as you want. The notion that you can create a value and see return relatively quickly was also an intriguing concept to Dustin. Dustin’s company IncFile, specializes in the formation of business entities. Since starting, they have assisted more than 150,000 entrepreneurs and small business owners form their businesses. When Dustin got his start with the company they were not thriving but he and his team managed to grow it into an 8-figure company in a relatively brief amount of time. Today he’s here discussing how modifying funnels and honing customer acquisition strategies allowed for that growth. We also touch on the challenges of scaling a team to that size in a short time span and navigating the growing pains that inevitably pop up. Episode Highlights: How Dustin got into IncFile. The processes that Dustin and his partner put into place to ensure the rapid growth of the company. How IncFile is filling a gap and taking care of the stuff that no entrepreneurs want to deal with. Through streamlined tactics and low costs, IncFile has become the leader in the industry and has continued to grow despite increasing competition. Dustin shares the key elements to a good sales funnel and the tools his the team uses to work and refine their funnel. Dustin shares his a 3-point strategy for finding a good starting point to getting into entrepreneurial tech. How Dustin’s company was able to pass those pivotal “choke points” that many growing companies experience. Scaling doesn’t necessarily equate with hiring. Hire slow and get the right people. The importance of worrying about what you’re good at and building on that rather than trying to improve what you are not good at. Double down on your strengths. Buyers who are often the most successful in their acquisitions are those who hone in on what they are good at. Transcription: Joe: So it amazes me, Mark, the people that we meet at these different events and that are just laid back casual seem like just good guys you want to go hunting or fishing with … not that I hunt or fish, it’s been a long time. I live in a lake but I haven’t gone fishing for a while or I haven’t caught anything for a while. Anyway, Dustin Ray strikes me as one of those people. I met him at Rhodium a few years back; totally laid back. I think you introduced him to me and surprised me later when you start talking about the numbers and what this guy is doing and so humble yet doing such incredible numbers. You had a chance to have him on the podcast recently. Mark: Yeah I did and Dustin is one of those guys whenever he and I talk on the phone and you know it’s not as frequently as maybe I would like but whenever we talk it ends up being like an hour and a half conversation. Rest assured this is not an hour and a half long podcast but it could have been because he’s got a ton of information. His background is fascinating. He started out in the music industry promoting some of the biggest artists that we know. He was telling me that when he was driving down through Las Vegas and seeing some of the artist’s stuff on the board that are coming in, I mean these are … he knows who’s behind these things. This was his industry for a long time but he decided to leave that industry and was really drawn to the internet world and got his start with a company that was not doing that great at the time. He didn’t know it at the time but didn’t know at the time and he’s now a partner of that company. And really under his guidance and some of the other work his team has done they’ve grown it into an eight figure company relatively quickly. And really just through being able to modify their funnels, understand better customer acquisition strategies, and get that conversion rate as high as it can and really make it a product that works well for his customers. A really cool discussion about modifying those funnels, modifying your customer acquisition process but also we touched on and I want to have him back on again. I say this with a lot of guests but I definitely want to have him back on again about some of the challenges as well of scaling a team when you go from this one million in revenue up to five million in revenue, up to ten million in revenue and then beyond that as well. There’s always this natural choke points where it’s not as easy to scale that team and they’ve been going through that. They’ve been going through some of those growing pains but doing it really really well. So we talked about a little bit of that as well in this episode. Joe: Well Dustin’s much more interesting than the both of us so let’s jump right to the podcast. Mark: Sounds great. Mark: All right Dustin hey thanks so much for joining me on the podcast. Dustin: Hey thanks for having me, Mark. Mark: I know you’re a loyal listener like you don’t miss a single episode of this thing so you know what we do. We know that we’d like you to introduce yourself. Why don’t you give just kind of a quick background on yourself? Dustin: Sure my name is Dustin Ray and I’m a co-owner at the IncFile.com. We’re an incorporation service that services all 50 states. We help people form LOCs incorporations. We’ve been in business for a little over 15 years now and we’ve helped over 150,000 entrepreneurs get their business launched. Mark: You didn’t start in this though, I mean this is … you have a background beyond that and you … full disclosure you and I met at Rhodium. What was it three years ago now I think? Dustin: Yeah. Mark: Yeah and we talked over dinner a little bit and you shared some of your background. You have a background in the music industry as well. Dustin: That’s right so I kind of accidentally fell onto the tech space I guess you could say. So I grew up playing sports, going to school. I kind of grew up in the music scene and that meant recording stuff with friends and then throwing parties and club promoting and working at eventually a managing company, a record label, and then I went over and launched the hip-hop division for music marketing nationally for Monster Energy Corporation. So I was in the music business for about 10 years and it was ironic that we’re here talking on the podcast because literally as I’m in the music business I kind of stumbled upon entrepreneurship in a podcast about it and that was kind of how I got introduced to the whole tech space. And when I was listening to just the different entrepreneurs … you know I didn’t have any friends around me in the tech space. I didn’t grow up coding. I’m not a coder. I’m not a technical person. So it was very much like an outer space experience when someone mentioned something tech. And so for me, it opened up a whole new world for me and it started speaking to every existence in my body about it. I love the fact that it was flexible. It’s not like a physical store that you’re at every single day. You need your laptop, you need your phone and you could be anywhere in the world. So I like that flexibility and I like the fact there wasn’t a ceiling. As long as you can build something scalable you could take it as far as you want. And then the other thing, of course, is the trading was I mean the value creation right? It was like you would read an article and it was like how in the world would somebody build something in 18 months and then they’re selling it or it’s getting acquired for millions of dollars. Like how is that even possible? That was like a foreign concept to me. I thought you got work hard, put in the time, be a savvy investor and when you have a lot of white hair then you have your money. So that was kind of how I got introduced to the tech space and then I’ll let you take it from there if I’m not rambling on but that was my introduction into the tech space. And then I found my way in through Incfile. Mark: Cool. Yeah, I want to get into that but I just made a quick observation and something I’ve noticed over the years is that people who come from outside of the tech world depending on your background it’s fascinating to watch what you’re able to bring in. The music industry and the entertainment industry in general and you can correct me if I’m wrong but I’m pretty sure this is accurate; crazy competitive space right? You’ve got to be top of your game if you’re going to be promoting artists and I mean everybody wants to be a music star of some sort. So if you’re in that promotions game you’ve got to be on top of your game there. I mean- Dustin: Yeah just like a lot of businesses I mean competition is fierce. You got a singer or a rapper or something on every corner and just like really in any other businesses it’s how are you going to stand out? How are you going to break through? It’s not always just talent. That’s where it starts but it’s really the first events that really … it’s what separates an entrepreneur, a musician, an artist, a rapper from the next. So yeah it’s completely … and it’s not a pretty industry either. I mean you hear some of the horror stories. I mean you’ve got to fight and claw your way to just get the money that’s even owed to you. It’s not like we have this automatic draft where if you owe me it’s got to be paid or this automated payments like we do in the tech space where it’s automatically … an invoice comes in and it’s paid. I mean in the music industry you have to have some fight in you. You have to know how to do all of that. Navigate and fight your way through to survive. And that does translate into any business but in tech space too I mean super competitive. Anybody can come in and make you either irrelevant with new technology or they could come in with more resources and push you out. So you still have to have that the same perseverance inside. Mark: That’s fantastic and I have a story to tell but I’m not going to tell it right now. Maybe you and I can talk about this another time or anyone that’s listening if you meet up with me at a conference I’ll tell you the story about the time I sat on an airplane and sat next to a multiple gold album recording artist who was sitting back in coach and had made millions and millions of dollars at the music industry and had almost none of it to his name because of managers and stuff like that that were taking the money from him. A fascinating conversation, a spoiler alert he was crying by the end of the conversation. So fun story but we would definitely go down a rabbit hole I don’t want to get into right now. I want to talk about Incfile. I want to talk about kind of your background there, how you got into it and also the scalability and some of the challenges that come along with scaling a business like you have with Incfile. So that’s about 15 years old, how did you get into Incfile in the first place? Dustin: So I’ve been with Incfile now for 4 ½ years in all in perspective. So the way I got in was a good friend of mine and business partner for a time; we had a graphic design company. And parlaying into the music conversation we were working with record labels in designing all the marketing packages for some of these artists that they have. You know the album covers, [inaudible 00:09:31.3], mind spaces at the time, anything graphic design wise. And ironically through a mutual friend, my business partner now at Incfile who grabbed me in, co-founder Nick he liked for what he saw out there as far as one of the designs we have put out. And by way of a mutual friend, I got introduced to him and we started working in a design capacity for Incfile. And at the time Incfile was much smaller than it is today and so there was ups and downs and I started kind of building rapport and Nick and I shared a lot of the same philosophies on business and perspective. It was interesting for me at the time because just like I mentioned I was listening to podcast and super fascinated with this world at that time and this is back in 2009 probably. You know we started working, Nick was open to new ideas and I didn’t have experience but I was just kind of sharing thoughts and experience because when you think about design you think about user experience at that time. I didn’t have any training but a lot of it is just psychology. It’s human behavior, human nature, kind of how people operate. And so Nick and I would collaborate on these efforts and be speaking late until the night and then into the early morning building that rapport. So at the time Incfile really needed to kind of turn a corner and so I started consulting with Nick. He asked me to help him to kind of redefine our sales funnel and our work process. And at the time it was a big deal, I didn’t realize how big of a project it was for Incfile it was … there wasn’t a lot of business coming in at the time so it was a kind of critical moment but I didn’t know that at the time or there would have been more pressure. So I started helping Nick and we started collaborating on redefining the order process and it really was our big sling at trying to turn a corner. And luckily enough through the efforts and months that we put in doing that it started to turn a corner and things started getting better and Incfile started growing. And we kind of continued helping each other out over the course of the next few years and it just finally got into a point where we’re saying look what we could do part time what could we accomplish together if we are both all in? And then that’s when I’d left Monster Energy and jumped in all in with Incfile at the time. And that was in 2014. Mark: That was in 2014. I don’t want to get into specific numbers and ask you to be sharing numbers but you guys have been growing pretty much consistently since 2014 right? Dustin: Yeah. We’ve been steadily growing year over year. Our business has been growing at a healthy rate as well. So anywhere between 50% to 80% year over year and that’s both top line and bottom line. And so we really are at this point we’re focused on growth. We’re a growth company. And we’re just constantly trying to redefine and push the anvil up to continue that growth. Mark: Yeah. So let’s talk about the funnel work that you did when you first came on. Did Incfile have funnels in place before that or did you come in and tweak what was already existing or did you have to kind of rewrite that book? Dustin: Now we had to rewrite the book. And I mean, to be frank, this is both from Nick who’s at Incfile and started the company and then myself coming in and helping. You know these are two guys that are just figuring out at how to go. He didn’t have previous experience in the tech world or building an online business and neither did I. So it’s literally just two guys figuring it out. So there wasn’t any specific processes in place or any sort of funnel analyzation or anything like that going on because again it’s back in ’08, ’09. Things are a lot more sophisticated now in terms of analytics and marketing and tools and things like that. But we were literally just figuring it out. We didn’t … we weren’t … at the time we didn’t have a lot of data to kind of drive some of the decision makings. So we just figured it out as we went and that’s why I think I said luckily we did something right and it started turning around. And to be frank and to be honest I mean we’re still figuring out as we go. We’ve been growing and I guess part of that is intuition with part of the strategy that we’re deploying. The other half is having a phenomenal team. We have great team members to help. I mean everybody is … it’s an understatement to say everybody is working hard because it’s beyond working hard. Everybody is really pushing a full play and we’ve been able to grow but literally, we’re starting to figure it out and getting a little bit more pieces in place to be more strategic and more structured. But up until really recently I mean we’ve just been figuring out as we go. Mark: One of the things that I love every time that we talk you’re always talking about tweaking and finding other things of that sales funnel that you missed before. I absolutely love that because I tend to set and forget. A lot of times I’d get a sense from you guys that you’re always looking, always experimenting with your funnels. Dustin: Yeah and that’s a good point to touch on because one characteristic too that Nick and I share is that we have this obsession with a fish in sea and process. And so tweaking it is really the game that we like to play. So we like to be building the product. We like to be refining it. We take pride in trying to be innovative and have the best product in the industry. Not even as a strategy but just more of a personality and characteristics traits. That’s what we’ve been doing since day one. It’s just constantly keeping our head down focusing on the product and making it better every single day. Mark: Yeah and obviously having a good product helps quite a bit. And we’ve talked a little bit about your product privately and what it does. I mean some of the services you guys offer are phenomenal. Making sure things are kept up to date and having that subscription portion of it as well. People can literally not worry at all about their filings. It’s a really cool service because I know I had to file actually in Texas for a company of mine and I started getting these notices and I’ll tell you as a business owner and entrepreneur you get all these things from the government all the time and you’re like I don’t want to deal with this. I don’t want to have to spend an afternoon trying to decipher all of this. And so you guys are really committed to filling that gap which is cool. Dustin: Yeah and I’m sitting in the same seat as you. Having private companies to even working at Incfile same thing, I didn’t know even what a registered agent was or what a franchise tax report was for the state of Texas. Somehow I must have put myself or something down for it but it wasn’t until I got to Incfile where I actually even understood it. And that’s where I think we fill a big void in the entrepreneurial journey. It’s just taking care of that stuff that really no entrepreneur wants to take care of. It’s not a sexy business in terms of like the way we might talk about the music industry or celebrities but it’s a fundamental core piece of running a business. If you’re going to be an entrepreneur and you’re going to be in business you’re going to have to take care of these things that we offer. So we try to make it … we streamline the process and make it easy. So we’re constantly innovating to make things faster and at the same time, we’re the low cost leader in the industry so we drive the price down. So where most people that may go to … historically speaking it’s a little bit more out there now because a lot of people are comfortable with doing business online now versus 10 years ago. But it really was the kind of fundamentals where people would know that they need to have a registered agent. There’s this state mandate that’s saying you have to do these things. But like I said it just frankly isn’t fun or people don’t want to deal with it. When you’re starting a business you’ve got 15 hats you’re wearing and you’re putting out fires, and you’re worried about sales, and doing all these other things. So we’ve really drove down the prices well to make it convenient and affordable to where a lot more entrepreneurs these days. It’s just part of starting a business nowadays. Nowadays it’s like okay I know I don’t want to worry about that it’s only going to cost me this much money so let them worry about it and they can deal with it for as long as I’m in business. Mark: Yeah, that’s cool. I want to go back over to the funnel stuff and ask you kind of a basic question. What in your opinion makes up the key elements to developing a funnel, a good sales funnel? Dustin: One is always … I mean some of this stuff may sound rudimentary but simplicity, right? Because in an industry like ours where things are very technical, you’ve got secretary of state, you’ve got government agencies, and the IRS and a lot of formalities with these bureaucracies that it could become intimidating and cumbersome when you think about legal services in general. So us not being attorneys for one has kind of served and helped us in a lot of ways as well. We are entrepreneurs our self so we can put our own hand on and think about how would we want this to work and simplicity is number one. I mean don’t make me think is the philosophy. If I had to think about something it’s already too difficult, too hard, and our sales funnel isn’t as fast as like selling a t-shirt. I mean you still … even though we’ve simplified and streamlined it you’re still going through in some cases depending on which package you have you may go up to 15 pages to get through the end of the funnel. So it’s very important to be fast. Just ask me the basics of what we need and in some cases, we’ll [inaudible 00:19:15.7] process where we will gather additional details that may be needed. But if you frontload your funnel that’s a recipe for disaster because people get exhausted and if you get in too many decisions you give them too many chances to change their mind. And really they want to get it done that’s why they came there. So if you can make it a simple process to go through and then worry about making the connection and introducing yourself and working one on one if need be to solve the rest of the information gaps. But we see a lot of our competitors … I mean it is very word heavy and very cumbersome to go through their cellphone. So we just try to streamline that. Mark: Yeah, keep it all simple. When you say front loaded you mean asking all the questions on that page one and somebody sees this big huge form and they have to get through that he would form it with complex language? Dustin: That is one but also I mean front loaded just meaning the entire funnel. So if once you get to the back end of our system, if there’s additional information or if there’s something that is unique to your business that we may need additional information on those are emails and conversations that we can gather afterwards. But I mentioned we may have a funnel that could be 15 pages but if we put everything into the funnel they may need … it could be much longer and people don’t want that. They want to get in, they want to pay, they want to have information; know that we are taking care of it and if you need something let me know but I’m already … once I click pay if you’re handling it and I’m off to the next thing. Mark: What are some of the tools that you use to really work and refine that funnel? I mean it sounds like you’re trying to gather some intelligence from your customers and watch their behavior to see where is the sticky points, where people are tripping up, do you guys use different tools to be able to collect some of that information and figure out hey you know what this is just not working? Dustin: We do not. Like I said we were just figuring it out and working along intuition for years. It’s kind of how you are where any business is focused on sales, you’re focused on sales and then you’re focused on servicing those sales. So years go by and business grows and at some point, we’re like man it’s a lot harder to implement these processes now that the train is moving at 120 miles an hour to implement the process. So that’s been an extreme challenge for us for the past couple of years. But we’re at the point now to answer your question about tools where we now have complete tracking setup for all engagement. So a lot of it goes through GA but we’re using a lot of different … whether it’s a UDM code or whether it’s an event tracking code on the website to understand where people are coming in and coming out. We’re using user testing on the back end so things like VWL for user testing and constantly refining that. Just tinkering with every page or basically not everybody married to anything on the page. So it’s kind of a philosophy where hey just because we’ve stared at it so many times for so long don’t get stuck in it. Everything is fair game, anything can go. And now we’re using VWL and Google Analytics and a lot more tracking into Google Analytics to tell us some of that data behind what’s happening in there. And we just started doing live user testing as well. So besides the quantitative data we’re using web services that actually have live users coming in that aren’t familiar with your page and then going through and giving you kind of like we are with this podcast a stream recording with their … they’re speaking while they’re going through it and giving you all the pitfalls and challenges and get things that they like and don’t like about it. So marrying that quantitative data with qualitative has really helped us just in this year alone. Mark: Yeah and just to be clear GWL being Google Web Optimizer I would assume right? Dustin: Yeah we use that as well, the search console but VWL is a— Mark: Oh VWL. Dustin: VWL. Mark: Okay. Dustin: In other words, it’s a Visual Website Optimizer; VWL.com for user testing. There are other competitors for that but that’s worked for us so far. Mark: If you can answer this … don’t feel like you have to but how many experiments would you say that you guys run in any given month? Dustin: Not that many. Because we were running at least … or I should say we wanted to run five to 10 in a week and just kind of push it up, push it up, push it up. But now we’re content having more patience and so we want to get it right. So we’re not being short sighted with it and now we’re really trying to really just run things that don’t interfere. It may just be one test a week, two tests a week at the most that we’re introducing only because we want to compare apples to apples. So if we make too many variable changes then the numbers and the statistical significance get kind of skewed and then assumptions come into play. So we limit it to one to two now. Mark: All right so you’re throwing around words statistical significance and you’re looking at biases and you’re looking at all these different assumptions that are coming into it but you started off on this without really any background in CRO and kind of this funnel optimization. Somebody listening to this that they just bought a business or maybe they’re looking to do something similar on their own, what’s a good starting point in your opinion for somebody that is just starting out in this area? Or maybe somebody that’s intermediate and knows a little bit about it but hasn’t really seen the returns yet from focusing on this continual tweaking and improvement? Dustin: Yeah I mean and you’re right I didn’t know anything coming in. So for me literally not having friends in the industry, peers of any sort, nobody around me locally, I rely heavily on podcast. You know podcast people speak freely, it’s a casual environment, people want to help other people, like minded individuals and I benefited tremendously from podcasting just from learning. And of course now with hands on training, being … working in an environment in the tech space you’re learning things every day. So one, learn by doing. Two, reach out for the resources like podcasting. And then the third thing I would say too that is when you reach a point when you could come up for air I would encourage to try to go to different networking events and meet other individuals and just get their perspective outside of your own that they might share that maybe you wouldn’t hear at podcasts. It might be more frank or direct or they might have encountered a situation that they can actually help you … give you advice for a scenario where as a podcast it’s more educational and you’re listening but you can’t just jump in and ask the questions so to speak. So those are the three areas that I would focus on. Mark: Okay, cool. I’m going to change gears completely here and spend our last 10 minutes or so. I want to talk about the growth with your company. And in my experience, because I watched a lot of companies grow, you know people that I’m just friends with and we talk about the challenges. But then also people that I have been advising as well. And I tend to find that there is this … there are certain choke points with companies where they have troubles turning certain corners. You know when you’re first starting up a company oftentimes that’s when your revenues start hitting 250 300,000 and then there’s another choke point once you get to about seven figures and trying to get up to the higher seven figure range so on and so forth. What’s been your experience? You came on at a critical point with this company when you guys weren’t really sure about the future and then you’ve been able to grow it since. What has been your experience with some of these choke points within the company’s growth, the company’s culture and I guess I should probably ask instead of assuming I mean have you guys experienced that? Dustin: Absolutely. You know it’s funny because… and this is a great topic. We should spend some time on this. As an entrepreneur or as a small business owner on the startup of a small company and I kind of am speaking more in the vein of like bootstrapping because we’ve been self-funded from the beginning. We’ve never taken any rounds of funding so I don’t have experience to speak on there. But as far as doing it yourself one thing I can say is focusing on … or I usually think that hiring people right is going to solve your problems. And it does … that comes into play later but it comes in very strategically later but what I figured out was that … like for example our biggest our advantages when we were smaller became our biggest challenges as we try to turn corners. And I’ll elaborate a little bit on that and so for example in our industry we were bootstrapped, we’re a small team, we’re still a small team. We’re competing side by side with companies that are Goliath’s in the industry that have either been acquired or have raised funds and are billion dollar companies. And we’re competing with these guys directly and we’re a very small team. So we’re probably 15 people in our office and then additional people in terms of remote resources outside of that. But what I’m getting at is that that worked into our advantage when we were small. So when you think about it we were able to think about it and have a conversation today and then we could start building it tomorrow. And we could … we were very efficient and we push and we work hard so we could roll things out at tremendous speed. And that kind of led some of the innovation that we now have that’s really industry leading now at this point because we were small and we can move fast. We’re still small but now that we’ve grown in size it’s … you face new challenges right? And so the challenge for us now is now it’s our disadvantage being this small. Because now we need to accelerate growth beyond where we are and our capacity is limited in terms of what our team could do beyond what they’re doing now. Because as I mentioned earlier everybody is pushing, everybody is already at capacity. And so even though you feel like conceptually okay well I … we’re managing the advertising so to speak, all the PPC and all that stuff. It’s been self-managed all the way up until this year. We had to bring on a team to help manage that. We’ve had to bring on team members to help us in different areas from SEO, content marketing, we’ve expanded our dev team. So the other things that we’re doing now to help turn the corner but what you realize is that you could keep iterating and moving but when your smaller you can solve problems quickly. Because the problems you have are generally something that can be solved quickly. When you grow, the challenge has become not overnight fixes. So you’re going to spend a longer time fixing it and then for your growth, there’s a reason why not everybody grows to be giant companies it’s because it gets harder, it doesn’t get easier. And so what we’ve realized too is we could see an opportunity and seize it and go take that hill so to speak and then we experience growth. We open up a new channel and we experience growth. Where we are now is we actually have to have a strategy and team to forecast ahead six months or more so we can invest in that today and then experience that growth hopefully six months, 12 months from now. So that’s one area that we have certainly run into a wall on and had to figure out how to maneuver around it. Because you get used to thinking that your core strength and your competitive advantage is always your competitive advantage. So it’s something like we’ve got to always be objective and look in the mirror and say oh wait a second is that now [inaudible 00:31:10.2] is this now the one thing that’s holding us back? Maybe it’s not so great. I need to think that was like what we hang our hat on but now you really got to think how to move forward and you have to remain objective about it. Mark: Why do you think that is? I mean why do you think that as companies grow … and this sounds actually by the way very similar to the same conversation I had with Rob Walling from Drip because they were the same sort of environment. A few dabs working together and they had an idea for something, they rolled it out and coded it out and pushed it out within a day and that was it. They were able to do that and then as they grew the same sort of challenges. Why do you think that is that as you grow it’s not as easy to just flip out new solutions? Is it because there’s more people involved or is it because the growth and the changes that you need to make are more sophisticated or … I mean what’s going on there? Dustin: I think it’s competition. Because once you kind of turn corners or try to go to the next level it’s a new game. You’re playing against different competitors and their strengths and what they do best and why they were in the top positions that you’re taking market share away from is because they’re doing something really well. And so you have to be able to then compete directly with them and do what they did well and take market share from them. So you have to constantly evolve. It’s not just internally what’s happening but just in the industry for competition, nothing in business is just standstill. So you’re in the gaining realm or losing realm and when you reach new heights or next levels the competition gets more fierce and you have to have even deeper strategies. You have to be thinking future, you have to have more of a focus because we could cover a lot of ground and a lot of places and growth but it might be more short sighted. It might be just low hanging fruit and we’re catching that. But at some point, you’re going to run out of low hanging fruit. And so once you run out of low hanging fruit it becomes all about strategy and long term strategy because you have to build things that are scalable and you have to compete against these guys in the course of six to 12 months and beyond. So it really takes a different mindset to turn the corners. I mean you can operate in the same manner as the same culture and the same type of people and teammates but the game and the rules become more fierce. Mark: You said something a little bit ago about you used to think that the scale you just hired or something to that effect but then you kind of learned that that wasn’t the case. Why is that? I mean obviously you need to hire to scale at some point but— Dustin: I think a lot of people try to scale too fast and I don’t … I mean some people can do it and some people are that experience so they can pull it off. For us, if we could have hired earlier then we potentially could have got further faster. We were reluctant to hire rapidly because we knew we were growing but we didn’t want to take the growth for granted. Expecting the growth to come so we would make sure that we had the business, captured the business and then when the need was dire we bring somebody in. But honestly, if we would have brought somebody in and forecasted at six months in advance we might have been able to keep the momentum going faster. But looking back in hindsight I do think there was some benefits of not hiring faster because again we focused on product and we focused on our customers. And so the product was constantly improving and essentially when you think about scaling what are you really scaling right? You’ve got to have a strong foundation to scale or build on top of it. So not hiring people at that time … I mean the last several years and the investments we’ve made and you know we weren’t … in our industry we were known but outside our industry, it’s not like we’re flying on anybody’s radar. And that’s because we have our head down and we were just building the product. And now that the product and the machine and so on is really strong in terms of foundation now we’re hiring rapidly in a sense. We’re really trying to accelerate it and bring on very strategic hires to fill specific niches or voids that we need to fill in terms of areas of expertise. And so it’s working for us now in terms of hiring for your right and not to hire to scale but at the same time if we wouldn’t have focused so much on the product and building the foundation that is … you know everything innovative and automated that we have it could be the death of us. We could grow too fast and then if the machine doesn’t work then you got sizable problems and when you’re talking about thousands of users and thousands of people on your platform, it’s not just two people calling and saying [inaudible 00:36:02.9] we’re talking about your phones ringing by the thousands and people trying to get those needs resolved. Mark: It’s fascinating. With culture and when you’re growing a company like that and you’re bringing on people and hiring quickly after a certain amount of time because you need to be able to support that growth. Have you guys been able to keep that kind of grinder spirit that you seem to exude with every time I talk to you? You know it’s that classic entrepreneur hustle. Have you been able to keep that culture with your company? Dustin: We have. So that’s a big deal for us too. I mean the people that you worked alongside with and the people that you entrust in helping to make decisions and contribute they kind of have to be in line with your philosophy and with the rest of the team. Otherwise, they’re searching between team or there’s a conflict of philosophies. And it’s a lot easier if there’s a culture fit to be able to rally everybody together for the common good and push forward. So in a lot of ways … in our case we certainly want people who are capable but if we had a scale of one to 10 and the most talented person was a ten we would still rather work with eight. Let him come on to the team out work everybody, fit with the culture and then we’re not going to have the kind of pitfalls or speed bumps that we may have if we have friction with somebody. So we definitely identify and work better with those types of folks and at the same time, I think that they appreciate that about us as well. Because depending on what environment they came from if they had the same spirit or they’re a fit for our culture generally it’s a place they like to work and with an environment people that they want to invest their time with. So I think that’s been huge for us and up until this point it’s work and as we continue to scale and grow it becomes more of a challenge to try to keep everybody in the same culture fit. But it’s important to hire slow and make sure you get the right people than to hire fast and then be reverse engineering that and figuring out how to let them go and get somebody else then. It’s counterproductive. Mark: Right we’ve gone a little bit over time but mainly because it has been a fascinating conversation so any last bits that you would want to put in or if anyone wants to reach out to you are they able to do so? Dustin: Yeah, absolutely my e-mail address is ray@incfile.com I’m on LinkedIn, Facebook, my name is Dustin Ray or my handle on Instagram or anywhere else would be drayonline. But if I was going to leave any other nugget of information with folks just from our experience or my experience one thing that people kind of find interesting but I think is very important is that a lot of people in our society try to focus on self-improvement. We all work on self-improvement but I think it kind of gets lost in transition with entrepreneurs because we’re constantly … we’re builders and we want to improve but society kind of teaches us in a way to work on our weaknesses. If you’re already good at something don’t worry about that, you’ve got to worry on what you’re not good at and improve in that area. And really just through experience life not just business, I kind of think it’s more important to focus on your strengths as for a self-improvement and be self-aware to say this is the area that I’m good at let me build you, fill gaps, and bring on people to help me execute whatever the task at hand is. But I think too many people focus on improving on what they’re not good at. Like for example, we ran a graphic design business for a while, okay I was interested in design. I like design. If I stuck there and invested my time into getting better at design and using Photoshop yeah I’m going to improve. I’m going to get better. But at the end of the day, my best is going to be mediocre. So I’m never going to be able to compete with the guy who’s a phenomenal designer. So rather than focusing on your weaknesses just be mediocre at them, I think you got to double down on your strengths. Be self-aware and know what you’re good at. And I think it kind of encompasses more of a positive mindset when you’re focusing with confidence on what you’re good at. You know even when you’re trying to improve on what you’re not good at it’s kind of a negative feeling right? It’s kind of you know you’re not good at it and you’re kind of getting down about it because that’s human nature but if you … you know the entrepreneur journey is tough so if you focus on your strengths and bring people on to help you where you need I think you could get further faster. Mark: Well, don’t tell my kids that because I keep telling them to work on the stuff that they’re struggling with in school. But I think when you are applying it where you’re applied it you’re 100% right. Dustin: Your kids they’re learning right so they don’t know exactly what they’re good at and what they’re not so I do the same for my kids. Mark: Right. Dustin: You’re teaching them to work through the problems. More problem solving than self-improvement at this point. Mark: Right. Exactly and also if you want to become an all-around good person work on finding those things. But you’re right as far as with your business and entrepreneurs and we see this with buyers all the time. Buyers that just kill it are the buyers who come in and they know their strengths. They might be CRO gurus, they might be SEO gurus, they might be really really good at just setting up operations or what have you and they look for the businesses that are deficient in those areas so that they can take them. And those are the guys that come back with two X, three X, five X businesses in a few years because they’ve taken their strengths and they’re not going to bother trying to work on the stuff that they’re bad at. They’re going to outsource that if they have to, make sure that somebody else is taking care of it and they won’t deal with it and it works. Dustin: That is so true. I gave up Mark … I gave up on trying to be smarter. I said well I’m going to self-improve but I’m not going to get any smarter so now I tend to focus more of my time on becoming a better leader than trying to get smarter. And so you can only build a company so big on your own so if you want to get smarter you’re only going to get it so big, you’re going to have to work with more people and bring in people to grow a sizeable company. So for myself today I try to focus on being a better leader and working with people and empowering them to be the smartest person in the room. Because their areas of expertise, they are always going to be smarter and better than I would be in that space. So I just try to focus on becoming a better leader and I gave up on trying to be smarter. Mark: I love it. That sounds like a great way to end this episode of you on the podcast. Thank you so much for coming on this has been awesome. Dustin: No, I can’t thank you enough for inviting me. I hope your audience gets something from it and I’m looking forward to catching up with you soon. Mark: Sounds good. Links and Resources: IncFile Dustin’s Instagram Dustin’s LinkedIn

Brad Wayland may be the only QLB broker that was asked to join our team. Others amy dispute that, but they were not interviewed today, so they don’t have a voice! Brad has been with Quiet Light Brokerage for less than a year now, and has already established himself as an honest, hardworking and driven entrepreneur and broker. Prior to joining Quiet Light, Brad spent his time focused on SEO for a custom t-shirt firm (Blue Cotton) where he is a partner. From there Brad built a portfolio of content & affiliate sites and eventually sold them to a private equity firm in 2015. In all, Brad completed 30 transactions between 2010 and 2016. Mostly as a buyer, with four sold. Brad learned quickly how to find the right opportunities and work out a deal that made sense for both the seller and himself. And he gained a reputation as the person to sell to, where sellers reached out to him to sell their business. Episode Highlights: [3:22] Who is Brad Wayland? [8:10] Why is the custom t-shirt business the most difficult ecommerce niche? [8:40] Buying and building a portfolio of content sites. [11:15] Wall street style negotiations, or nice guy everyone is happy? [11:45] Name dropping. Yep, Brad met Warren Buffett. [13:50] How to implement economies of scale. [14:45] Outsourcing and keeping things simple, streamlined and with little effort. [16:10] How Brad set up the corporate structure(s). [17:00] How to work with investors and set up a win/win. [19:40] Why having investors can turn pretty uncomfortable, quickly. [20:30] Brad’s recommendation on deal structure for investors. [23:10] What interest rate do you pay investors? [23:30] How the multiple of SDE changes with larger net numbers. [27:15] Brad’s view of PE monies and what’s happening in the industry [28:40] Google “freshness” is critical to long term content portfolio success. [29:50] Content multiples are strong, the nich is hot and buyers are in abundance. [30:30] QLB closes a content site for just under $9,000,000 [32:30] Bryan @ QLB has a supplement business under LOI for $18,000,000. [33:55] The worst conversations we have as brokers are… [35:35] Near death accident: Wayland Falls – the newly named mountain in North Carolina. Transcription: Joe: So Mark the more we bring on brokers here at Quiet Light the less I feel like I’ve achieved anything in my life. I think you and I are just a couple of slackers compared to the people that have joined the company. Mark: You know I feel the exact same way. We were at the capitalism.com just a few weeks ago and I was standing next to Walker, you know the last picture he sent me was of him in the lineup with Bill Nye the Science Guy right next to him. And he’s casually mentioning over a dinner about the different documentaries he’s been a part of and all that right? But it goes for every single person on the team. Amanda, when we were talking to her there and I was just consistently feeling like boy I need to get my butt in gear. Joe: Yeah I don’t try to have in-depth conversations with Amanda about business because I just feel stupid. Mark: Right, I mean she just starts going off and you’re like oh okay I … everything I thought I knew yeah it could pale as in comparison. Brad though is one of those guys and I remember the first time we did a companywide call; we do this once in a while with Quiet Light Brokerage because we’re all over the world. All over the country but all over the world and so I don’t know maybe once a quarter we have a companywide Zoom conference call where we can see everybody and there was Brad on top … in his office overlooking his factory floor. And I think everyone was just kind of like oh this guy has actually done and accomplished some real things. Joe: Yeah Jason was calling from his kitchen. Amanda was calling from a car. Chuck was from home. I was from home. You, of course, have to get out of your house because you have got a basketball team and a half in your house … well, maybe not that much I exaggerated. I love to exaggerate about the number of kids you have by the way. Mark: Hey it changed since the last time by the way. We’ve had like four more kids. It’s attractive to … you know and it’s hard to- Joe: Completely different podcast right there. Mark: But Brad was somewhere in the world. We have no idea. I think he was in Cuba or Costa Rica or something. Joe: Oh right he’s always somewhere else, some other exotic location. But yeah Brad is an impressive guy. A very low key but man he’s sharp. He talks about his history, talks about what he did at the Blue Cotton T-shirt company. It takes 22 hands to make one t-shirt. It gets touched 22 two times but he stepped in, focused on SEO, and that company blew up after a couple years of him being there. But that’s not really what the podcast is about. It’s about him and his experience but I’d really focused in on his content portfolio. At one point while running … or while being a partner at blue cotton he built a small little multimillion dollar content portfolio on the side and eventually sold it. And he outsourced everything. He had a reasonably low workload and he used initially other people’s money. You have to listen to find out whose money he used. It’s kind of interesting and fun but he did very well. And he talks about that approach and I think it’s something that any listener can get something out of it in terms of whether they’re building their own portfolio of physical products companies, drop ship companies, SaaS companies, or content companies. And of course get to know Brad along the way as well which is kind of the purpose of the podcast. But I think there’s so much more to it than just getting to know Brad Wayland. Mark: Yeah I think one of the things I love about this company is it seems like everybody that we bring on just seems to up the ante as far as their qualifications. I mean two or three years from now we’re going to have Elon Musk asking us for a job. Joe: Okay, got to be very sad for all the investors of Tesla, sorry folks. Mark: I don’t know maybe they’ll kick him up and who knows. All right enough of me talking, enough of you talking, let’s listen to Brad. Joe: Hey folks it’s Joe at Quiet Light Brokerage and today we have one of our very own on the podcast with us. Now don’t get bored he actually has a life time of entrepreneurial experience. He’s bought and sold many businesses. He’s kind of a big deal. I think he bought and sold more than I have for sure; probably more than most of us. His name is Brad, most of you folks listening know who he is. Brad Wayland welcome to the Quiet Light Podcast. Brad: Hey Joe thanks for having me on. Joe: How are you doing? Brad: I’m doing well. Joe: Are you ready to tell all of these people everything about you? Brad: I’m ready to tell them but I would contest your point that I’m kind of a big deal. In fact, I was on another podcast with Chris Guthrie that you had on the Quiet Light Podcast a couple of months ago and several years ago. He did an intro and he said most of you probably don’t know Brad Wayland. He’s what I call a silent baller. Am I right? All right well- Joe: He subscribes to HBO there. Brad: Yeah I would call myself pretty well unknown. But I have had a lot of experience and I hope that I can share some things today that will help our listeners. Joe: Well you are humble. There is that and you’re part of the Quiet Light team because of that vast amount of experience that you do have. And you’re one of the few … actually, maybe the only one where Mark actually said “hey maybe you should do this” versus the rest of us which reached out to Mark and said “hey can we do this?” that’s right isn’t it, Mark asked you to join the team? Brad: Well there’s different versions of that story but I specifically remember that I asked Mark. I knew Chuck from the buying and selling world so I kind of made a joke at Mark about [inaudible 00:06:41.6] Chuck on I guess if things don’t go well on the buying and selling world you might end up doing some brokering. And he was like I think you might be interested in doing some brokering with Quiet Light and that’s where the conversation kind of started. And then over about a six month period he kind of showed me the Quiet Light way and I started getting more and more interested. And I really enjoyed my time at Quiet Light so far, it’s good for people. And really every day when we get on the phone calls with buyers and sellers I’m just blown away by how impressed they are with the team we have at Quiet Light. Just the knowledge is there, its entrepreneurs. I tell everybody every day, its entrepreneur led. These are people that have bought, sold, built, operated in through hard times so I really do enjoy it. And I think brokers sometimes have like a little bit of a stigma attached to them. And I think that we are kind of definitely leading the way in kind of changing that. Because I find that people really look at Quiet Light as a breath of fresh air. Joe: Yeah I would have to agree. I was just at Brand Builder Summit down at Austin and really for the first time in a long time, I mean I started in 2012 the broker stigma had an icky feel to it. You and I have been self-employed for years … decades probably and people are starting to reach out to brokers for the experience and expertise that we do have. So it’s good but let’s talk about your experience and expertise. Who the heck are you? Tell us about your entrepreneurial history and when you started? Kind of how many things you bought so on and so forth. Brad: I started having some interest in the internet world around 2003 and I had graduated from college with a finance degree and was working as an accountant for a publicly traded company. And I really hated the work and actually thought you know what I’m going to get fired from this job before I can find another job because I felt like I was doing such a poor job. I just wasn’t really built for the check in to your cubicle at 8 AM and checks out at 5 PM. I needed something a little more challenging for me and maybe a little less structured. And so I was thinking I would go into financial planning because I had a degree in it and had an offer. And a couple of friends of mine said “Hey would you like to come on and work on some business development for us in our t-shirt company?” And they had just crossed a million in sales and they have launched a website and it’s called Blue Cotton. And so I came on and quickly I became enamored with search engine optimization and spent a lot of time trying to figure it out. And honestly I fumbled it around like four years and even to the point where I think they thought does this guy have any idea what he’s doing at all? But around 2005, I started realizing what we needed to do and that was rebuild the site. It had not been built where it could really ever rank the way that certain things were structured and basically the site was just a giant image. So we rebuilt it. It took two years to rebuild it and when we launched it we were on the front page of Gizmodo within 24 hours from just people finding it. And back then there was- Joe: Gizmodo, what the heck is Gizmodo? Brad: It’s a popular tech blog. I’m sure you probably heard of it. Joe: Clearly I haven’t, so thank you. Brad: Well it crashed the site. And so that first day we launched it [inaudible 00:10:02.2] spent two years working on this project, it’s never going to do anything. And that morning we got a phone call from the developers, our phones are ringing off the hook and they said something’s going on. There’s tons of traffic on the site. Back then you didn’t even have Google analytics. We were paying for index tools back then. And so they … Gizmodo crashed the site, we had something like five million people trying to get to the site and it couldn’t happen. Joe: Wow. Brad: You know it was just some crazy situation and there was no social media. So a lot of the traffic back then went through these popular blogs. That’s how people … they have their RSS readers on their desktop and they would go through and read their articles and stuff. So they did that and then we had built a design studio where people would create their t-shirts in Flash. And a month later Adobe awarded us the site of the day which didn’t crash site but it gave us a page rank 9 of 10 link from Adobe’s website. Joe: Wow. Brad: Adobe was the most … at the time Adobe was the most went to website in the world. And the combination of Gizmodo … well because of Acrobat and I mean think of all the click here is that you have for Flash, for PDF reader, for all those things. It had tons of links coming in. And so the combination of those two things propelled us and we went on a crazy tier of growth. It grew up 50% a year for nine years on average. Joe: Woah, we’ll let the listeners do the math on that unless you’re going to tell us. 50% percent a year for nine years and you wouldn’t want to know. Brad: Well we went … we grew from … I mean we were small. We were like a million dollars in sales but that ride took us from like, it probably took us to about seven million. I still own my equity in that company. I didn’t start that way. We kind of after the web kind of took over the two owners came to me and said hey 85% of our revenue is coming through this thing you’ve helped us work on so we need to come up with an arrangement here. So we ended up doing that in 2008 and today Blue Cotton is still a thriving business. It’s got … we’re, I would call us a medium sized business now. We’ll be considered a low eight figure business in terms of revenue. We’ve got 125 employees, 110,000 square feet of production capabilities which one I’m using all of that now. We use about 55,000 [inaudible 00:12:27.3]. So I did that and just to kind of quickly summarize that when you’re in the custom t-shirt world you are making money in the most difficult way possible. A custom t-shirt has to be touched by about 20 people before it goes out the door. And if you order one for your family reunion then it’s got Joe Valley’s Family Reunion 2018, it’s time sensitive. You’ve got a specific idea and you don’t want to be the guy that ordered them and your family says “Man, Joe these are awful. You did a terrible job designing them.” So there’s a lot of anxiety in the purchase and so I became pretty interested in content. And around 2010 a friend of mine who was … is a pretty big name in the vector space, like image vectors, he was looking at a blog for sale and it was on Flippa. And he … it was it was a $50,000 purchase price and he said you know what it’s only worth 25 grand to me in high five. Man, that thing has content and ads like that’s the most amazing business model I’ve ever seen. You don’t have to do anything. Joe: Especially compared to 22 hands per t-shirt. Brad: Right. So I ended up buying that site for $50,000. And that started a new trajectory for me. From 2010 I started getting heavily involved into content and affiliate and just bought and sold a lot of stuff from 2010 and 2015. 2015 I divested a lot of it up to private equity but the- Joe: Can you ballpark how many you bought and sold in that time period? Brad: Yeah so I did 30 transactions between 2010 and 2016 and most of it was buying. I had basically four sales everything else was purchase. I kind of quickly … the space was the web design space so the blog that I bought … economy was kind of in the tank in 2010 and so the blog that I bought I quickly made my money back on it. It’s a $50,000 purchase and I made the money back in like 10 months. And I thought this is like too good to be true. So I started kind of keeping my eyes open for opportunities and found another one that was for sale and overpaid for it compared to what I had done. So I paid 72,000 for the second one and it was starting on that same trajectory but after those first two, economy was really not doing well and I started having people reach out to me. And so I had a guy reach out and say hey I hear you’re the guy that buys web design sites, you’ve bought this one and this one would you want to buy mine while I was tapped down on cash. I had spent all my kind of extra money that I had to kind of do something like that with and so I told him you know what I’ll give you about 80% of what you made in the last year but that’s the best I can do and I can do it today. Joe: And they said? Brad: And he said I’ll take it. Joe: So let’s talk about that on … just for a moment because you’ve got experience, I mean you bought 30 businesses, 30 transactions over the last several years. Was your process New York Wall Street walls to the wall top negotiating or was it nice guy that really likes you and you built a relationship and you made it work both in the end? Brad: I’m probably me there. I’m a quick decision maker. When I was in … when I graduated from college I had the opportunity to meet Warren Buffet at a finance event that went on in my hometown here at Bowling Green. And Warren Buffet said that he plays bridge, and he drinks diet Coke, and he takes 13 phone calls a day, and he doesn’t have a computer in his office and one of the questions was how do you evaluate companies? He had bought Fruit Of The Loom which is why he was in town and they said how do you evaluate it? And he said honestly I don’t spend a lot of time on it. I go with my gut. I look at the few things that I think I have but I usually make a decision within a matter of hours about whether or not I want to buy something, the price, everything which is not the way M&A is done. Joe: Wow. Brad: I know. He’s a great capitalist in terms of what he does and that’s not me. So I’m not trying to embarrass Warren Buffet but there is one element that is like me and that is I don’t waste time. I like to put deals together. I’m not very patient. And that kind of benefited me in the buying and selling world. So I did things very unconventional. Like my transactions, I would never use escrow. I would try to do it as fast as possible, meet them in person, come up with an arrangement of I’m going to wire half here and then you’re going to transfer this. Or I’m going to wire it all you’re going to transfer these things at the same time. I just did a lot of things that weren’t kind of the norms because I’m just not very patient. I kind of wanted to get my hands on it that second. I didn’t want to wait 60 days for things to pan out. Joe: So no long drawn out contract negotiations on asset purchase agreements or SBA deals anything like that? Brad: No. Joe: Pretty simple. Brad: And I would say that I focused less on making sure I got this exact price that I wanted at that exact multiple that I wanted. And I focused more on trying to find things that I knew I could immediately do something with. When I got into the design space I don’t know anything about design. In Blue Cotton, we have nine designers that work there. I don’t know anything about it. I don’t know anything about web design really. I know I can tell you some names of like what post would be like but I know nothing. If you put me inside one of those Adobe programs I’m totally lost, I know nothing about it. But what I did learn pretty quickly is that there are some economies of scale to having things that are alike each other. And so when I had one blog and an advertiser would come through it was like what would happen if I had five of these blogs? Or what I could do is I could leverage the advertiser for five times the amount and have the same amount of contact. And so I did a lot of that and I did it on the affiliate side. You know I couldn’t negotiate better affiliate deals for my company because I would say well here’s all the traffic I have in total and they would look at me and be like oh well if you’ve got that much then we want to do this size e-mail send or we want to do this size add by and so I started to feel that … and a lot of the … so about 15 of my 26 purchases were in the design space. Joe: And did you have writers that were consistently focused on the design space, outsource VA’s, or did you do it all yourself? Brad: Yeah so in the design space there’s a lot of writers available. You go to some of the popular sites like Smashing Mag or some of these other big names. You’ll see a new name every day. And so I again I kind of always try to structure things in a way where I didn’t have to spend a whole lot of time on them. So you know one of the things that I did is I found writers that were okay at being paid once a month because I didn’t want to be jumping into PayPal 15 times a month to pay writers. So I found writers that could go across several sites that wanted to do like a substantial amount of work. And so I’d have four or five of them and then at the end of the month, I would just one time pay everybody for all their posts. I found people that knew what I wanted instead of me having to review every single post I found people and I was like okay you did these three posts for me this is exactly what I want, go down that road. Some of them would send me like here’s what I’m thinking about doing this month, some of them were just like I know what he wants and they would just do it. And I just always try to streamline things to a … the most hands off as possible. I did not want to hire people to support the network. I didn’t want to … I wanted to keep it very like the opposite of the teacher business. I wanted it to be something that I could do a lot with a little time. Joe: Did you put all 30 of the properties or 26 when you sold four off, did you put them all in one LOC did you have them separate? How did that work out? Brad: Well I had to … we hadn’t gotten into how I built the portfolio so I will tell you that I quickly ran out of my own cash and had to start looking for help. So I did end up having three different LOCs total and that was because of the way I had to go find capital for the deals. Joe: Okay. Brad: And then I kind of got tired of that and so I basically rolled all of those partners up and blown and got them out and took everything over 100%. And you know the thing is when you’re … there’s guys that it was their pockets that are out there raising money and I had a conversation with one of our … someone who’s buying a property from us yesterday about it. When you’re trying to raise money from people instead of going out and asking for everything you think they could possibly muster up one of the best ways to convince people that you give them good returns on their money is to do something good with some … with a small amount of money, something that you know is not a big deal to them. And I didn’t really do that on purpose. It’s just that my deal started out kind of small. I started around this $50,000 range and by the time I was done I wasn’t interested in $50,000 transactions. I didn’t do anything that was all that large but I did a couple of three hundreds. I did two $500,000 transactions. And the thing about those transactions is I put that money together in a few days and it wasn’t coming out of my bank account. So I had people that believed in what I was doing and I could literally pick up a fund and say hey I’ve got this opportunity and they would say I’m in. Joe: For those that are listening that have portfolio folks that might do that but for those folks that are investing that haven’t ever done it before are they getting equity or are they getting return on investment and how quickly do you start paying them back? Brad: Yes. So the way that I was kind of pitched it I didn’t have anybody that I was connected to that was like used to investing in tech … so I’m talking about people that have some extra income or extra savings but they’re not people that were like highly technical. So, my parents, you know the first people I went to were my parents and I said “Hey would you guys want to invest a little bit of your money into an idea?” And they said, “Sure, what’s the terms?” Well, my terms were terrible for me in my opinion. I said well if you’ll put up the money I’ll give you 50%. That’s where I started. Joe: Oh. Brad: And I talked to someone yesterday he said that that was absolutely ridiculous. They are like you gave them 50%? I was like well I didn’t have … I wasn’t going to be able to buy it [inaudible 00:22:40.7]. Joe: They could praise you so that … you know they ultimately lost money on the flunk transaction called Brad Wayland. Brad: Still that’s true. There are some things in our past, there’s some car situations and things like that but it definitely cost them some money and a hard day. But I started with them and … but I became concerned also about … oh wait a second, they’re willing to put a lot into this after we started going. They’re willing to put more into this and I started thinking I don’t really want to be responsible for my own livelihood and know that I could potentially tank theirs. Joe: Right. Brad: So I started to get kind of concerned about that. And they didn’t have unlimited funds anyway. But around that time I started looking to partner with other folks and I partnered with some people that I didn’t know as well as my parents. So people that had told me like hey I want to get in and my relative over here is willing to invest in me. So I did that kind of deal and I became pretty uncomfortable with those pretty quick. And the reason why is because when you’re working with your parents or if you’re working with a close friend you kind of know we’re not going to end up in a courtroom somewhere. Joe: Right. Brad: You know that that’s not going to happen. You know now you could ruin your relationship or you could have that little mark on your relationship where you’re like well remember that time when I lost like $400,000 of your money? Sorry about that. You know like that’s not a good situation. But I started getting uncomfortable with having partners at all in the space when I took on partners I didn’t know. Joe: So how did you determine … you know once you’ve got beyond that experimental stage and your relatives and friends of relatives and giving them too much, what would you recommend to somebody that’s listening that wants to build a portfolio of sites? Is getting money from people are not used to investing? What would you say? Look if I were to do it all over again with what I know I’d probably offer them X, Y, Z, and pay them how often? Can you summarize what you know? Brad: Yeah. So if I could do it all over again I probably would do it the same way. I understand that giving up 50% sounds like … I don’t know if that sounds like a lot or not. One guy I talked to yesterday said yeah it sounds like a lot. It probably was a lot. They weren’t doing anything. And I was … you asked a minute ago were they getting paid? If I took a check they got a check. And I was looking for cash flow because I wanted to build up and be able to go buy more and do things. So I wanted to realize real gains and kind of do something with them. So I would give a lot early but I would structure the agreements to where you control the situation. And that is one thing I did. I just … when you have all the knowledge and the other side doesn’t really have an opinion, they’re like hey I don’t know really know what you’re doing with the money over there. I just know that you’re operating these websites out here and you’re making us money. When you have that kind of arrangement those people are more willing to say well you tell us what the investment is going to look like? And so from my perspective I kind of went down the road of just saying look I want to … I still want to pay you your money but I don’t want to have partners any more for various reasons. Like I want to structure this in such a way that makes sure that you get your return but also make sure that I benefit from it in the way that I think I should long term. And so I’d like to roll out … basically, I bought them out. I just came up with a structure and said this is how I would value the properties and I can [inaudible 00:25:59.2] the properties to pay this off. And so I rolled everything out into basically a Seller Finance note and I was able to get it done in 20, 30 days. As opposed to an SBA loan or trying to go out and raise … when you do a situation like that where people are giving you their cash and you’re dealing with multiple investors, if you are able to call the shots then when you’re ready for that change you can do it very quickly and efficiently. Joe: How many different investors did you have at that time where you had to get them out? Brad: So I only had really three people that had invested at that time but at the same time I was looking to buy more. So when I rolled it out into a loan I actually brought on three new investors but I brought them on as just debt. Joe: Got you, okay then you paid them a higher than normal interest rate. Brad: I did. So it depends on who it was but my interest rates were 6 to 9% on the deals that I did. Joe: Okay. Brad: So it just depends on who it was. And I never really nickeled and dimed people over the interest rate, I try to find people that I thought would be able, that would trust that I would do the right thing with the money and [inaudible 00:27:07.6] plus trying to get the exact interest rate. Joe: Let’s talk about for those listening thinking about rolling up different properties into a portfolio. Let’s talk about multiples and returns on investment. You know we talk all the time about a business that’s doing 100,000 that’s five years old with one employee is worth a certain multiple but an equal business with one employee and work load that same age that’s doing a million in discretionary earnings not only is it worth 10 times more in terms of numbers but it’s also that multiple goes up right? So instead of two and a half to three and a half times in terms of value, the multiple because of the size and breadth of the business that multiple might jump to four or five times. Did you find the same thing to be true when you rolled up essentially 30 small content sites, 30 small blogs into one portfolio and sold off to a private equity firm where they pay a much larger multiple? Brad: Yeah okay. So … just so you know the private equity firm that I sold it out to I sold it at four and a half multiple. So just to kind of … that was a high multiple, I was very pleased with the transaction. Joe: Okay. Brad: So in my sale, I definitely saw an increased multiple. Okay, so from my perspective I did transactions that were … I did a lot of them in the 50,000 range and then as I got further down the road I did a lot of 125, 300, a couple of 500s. And here’s what I found from my perspective, the properties in the … at least in the web design blog space that we’re selling for more were higher quality properties. So where we deal with every day like we’re talking to someone who’s selling on Amazon, we could find someone who’s selling on Amazon that’s doing $50,000 a year in discretionary earnings, it’s got … doing everything but they’re in a small category. Whereas you could find someone who’s doing a million dollars in discretionary earnings that’s doing everything perfect as well but they’re in a broader category. So we would see that where it’s like hey they’re both doing great they’re … you know but they just happen to make less. In the design blog space, it wasn’t so much like that. It was like if you’re doing great then you are bigger and you are earning more. And so they did command higher multiples. I don’t know off the top of my head I know one of my 500,000 transactions was a two and a half multiple and … but I know that one of my $300,000 transactions was a three point maybe one or two. Joe: And you talked about when you purchased it. Brad: When I purchased; yeah. So [inaudible 00:29:46.2] a lot of that. Joe: When you sold it was all lumped together and one multiple was applied. They didn’t look at the individual blogs and sites and say we’ll give you this for that and this for the other one, it was all- Brad: Right and the and the private equity plays … I mean I’m sure that you’ve talked to people just like I have, the private equity world is … we’re seeing some changes I think in the industry right now with private equity. I think there’s kind of two things going on. One is private equity is scooping up a lot of sides, stripping out all of the cost out of them, and literally just let them die and because the return on the money is good even then. That’s one thing that I’ve seen private equity doing and that’s what happened with mine. It killed them off. I mean there’s no way. Joe: It killed them off. Brad: Yeah but having said that, that company that bought it is thriving. So I think through the acquisition they learned some things about what they wanted to do and what they were good at. So I don’t know that they would look at it as a failure because I think that if they were able to use the information to then go and build a much bigger company that’s doing some pretty big things. On the other hand, I had mentioned the other way that private equity is going like we just had a transaction that closed this week that I … where you’ve got an operational group that is under private equity. So we see the private equity guys a lot of times, they’re like hey we want five million on EBITDA. Well, we don’t have a lot of sites that come our way that have got these big seller discretionary numbers. So what I think is happening in the industry right now is there are these operational groups that are saying hey we’ll go deal with 10 or 15 of these things, we’ll still get you your … whatever you’re looking for, several million dollars in sellers discretionary earnings but we’ll operate all these things underneath you and kind of keep them running. And I do think that they’ll like hold on to the content and just let it die. I think that Google especially is fighting against that right now specifically. I think their Freshness algorithm has kind of taken over and kind of prevented people from being able to do that effectively. And so I don’t think that strategy is advised or a good idea and I think it will go away completely. Joe: You mean in the algorithm updates or having those sites die off a lot faster if you’re not doing anything? Brad: They do. They just … they track what you’re doing and I’ve even done some experiments. So I analyzed it on a small content portfolio and I have a marketing firm that runs those forming. They basically do all the content and everything. And we have experimented and seen Google Freshness is a very real algorithm that if you fall asleep on a blog or something that has any kind of time sensitivity at all then you will pay the price and it doesn’t take very long. Joe: Got you. So for anybody listening that thinks that Quiet Light is only a physical products e-commerce brokerage firm, Brad is obviously showing us that the experience that we have is pretty vast. Jason’s been in the affiliate space. We’ve all done SaaS, affiliate, content, advertising, physical products, but Brad obviously I think probably the bulk of transactions that you’ve closed so far with Quiet Light as an advisor you had been in the physical product space. But you’ve got a tremendous amount of experience in content as well correct? Brad: Yeah but to me, the content is hard to come by. I don’t know if you feel that way or not but I don’t get them a lot. I did a transaction last month for a guy that I actually had bought three websites from in my buying days. And it was a really interesting dynamic because I was able to … when the buyer has been on the phone and saying can I trust this guy? I was able to say you know what I did three deals with him myself and I can tell you it went exactly like this [inaudible 00:33:21.0]. So that was kind of a neat thing. But you know he came to me and said hey I want to sell a content site and he was monetizing it through digital downloads, and not a big transaction, a couple of hundred thousand dollar transaction. And you know he said what should I expect? And I said you know what the content is pretty hot, we don’t get tons and tons of content people trying to sell these days. People want to hold onto it because it’s very low workload and it’s very high earnings for what people are doing and they seem to be getting very good multiples for it. So we priced it out at a 3.25 multiple and we got about 96% or something of the asked within 72 hours, I think you sent me an e-mail and said both your listings this week are going to be under a lot. By the weekend you are right one was 48 hours, one was 72 hours that transaction was closed in three weeks start to finish. Joe: Yeah content is easier to do due diligence on as well. I just had a content site closed. What is … we’re recording on I think Wednesday right? Brad: Yeah. Joe: So 10 days ago. Less than 10 days ago I had one sell and it’s interesting I’ll give you the details of it. Daily updates, hundreds of thousands of visitors to it and Google was rewarding it like crazy because of the vast amount of new content on a daily basis. And the revenue took off like a rocket. It was just under a nine million dollar transaction and a very very high multiple. Higher than yours but it was explosive growth. It was very big. A lot of … their discretionary earnings is obviously very high. So the bigger the discretionary earnings, perk of the growth that you’ve got there the higher the multiple as well. So content sites if you’re out there listening and you’ve got a portfolio of them or you’re an individual person running one and you think that you’re hearing things that are not worth all that much, truth of the matter is that we saw lots. And there’s lots of good buyers for them. Brad: And I think that’s your point, you asked the question earlier. Are we seeing the multiples go up the same way? And I think across the board you just have a supply and demand issue when you get into larger sites. There’s just not a lot of them available and we’re seeing that our buyers are ready to go on larger transactions. You just don’t get as many large transactions to come by. And the example that you gave, I’m pretty sure you had competing offers on that deal. Joe: I did. I had three offers and they kept … they update each other and grew it up. Bryan- Brad: Three offers on a nine million dollar property, that’s something. Joe: Yeah. Bryan’s got the physical products business; its nutritional supplements. It was listed at 15 million and is under contract at higher than that because there were multiple offers on it. So don’t be afraid. I hear people tell me look I think I should sell before it gets too big because there’s not going to be as many buyers out there. That’s not what I’m finding. It’s not the case. Would you agree that there’s a ton of money out there for the right business? If it’s a good quality business it’s going to last. Brad: Well it will sound very counterproductive to what we’re trying to do at Quiet Light but every week I talk to people on the phone and I just basically tell them if you’ve got the willingness to keep working on your business you should not sell. I mean you just shouldn’t because you should grow it as big as you can. Because it’s not easy to build a business that does what your business is doing. Whatever it is, anyone that we’re talking to is having some level of success because they’re talking about selling and they know they’ve got cash flow and things like that. And I just always tell them if you’re done let’s go. If you’re ready to be done or you’ve got other plans or you want to travel or you want to do this or that or you want to … you’ve got a new venture that you’re thinking about sure let’s list it. Let’s get it done. But if you’ve got the willingness to keep going then we’re here when you’re ready but honestly keep going. Go as far as you can take it. Joe: And Mark calls that reckless honesty because it’s not necessarily in our best interest but it’s what we all do. He did it for me when I sold back in 2010. The difference I’ll tell you now for those that are thinking they’re emotionally tired and done really you’ve got to sort of tap yourself in the chest and say do I have the heart? Brad: Yeah. Joe: Because the worst conversations I’ve had are when I say look, you want X value, your business realistically is only worth Y. If you hang on another 12 months and you reinvest your energies, you set some goals, you get that traffic back up, and you get that revenue going again at a higher level you’ll get Y but it’s going to take 12 months. The worst conversations I have are when they come back to me in 12 months and say you know I didn’t do any of it. The revenue has gone down 20%, can I still get the X you talked about? And the answer is no because they didn’t have the heart. Those were the worst conversations. Brad: Right. Joe: So always, I tell people tap in my chest if you’ve got a heart do it. But like you say, if you’re emotionally done; if you’re ready we’re ready. I think some people … I’ve been doing this six years as you know and occasionally we tell people look it’s in your best interest to hold off. Sometimes they’ll interpret that as we don’t want to list their business. That’s not the case at all. Brad: Yeah not. Joe: When they’re ready, we will do it. We’ll get that buyer. And just from the few examples that we’ve talked about, there are buyers and situations where we get it under contract very very quickly. Listen Brad we are running short on time you shared a lot of information here that I think will give people good insight into you into building a portfolio of either content businesses or any businesses the way that they can sort of piece it together the way you did and then exiting which is fantastic. I do want to talk about one thing briefly though. Personal in nature if you don’t mind, can we? I won’t go too far I promise but say yes. Brad: Yes. Joe: Okay. So I understand you went hiking in North Carolina recently and they’re renaming a mountain after you. Brad: Yeah. Joe: Do you … what happened there? Brad: Well my wife and I have five boys from range two to 11. So we’re pretty busy living life. And for our 16th anniversary, we decided to go to Asheville North Carolina, leave the kids at home. My parents came to town to take care of them and we went to Catawba Falls … which you can Google it. There has been many fatal accidents there. In fact, there’s been a fatal accident there since I left. Pisgah National Forest has many accidents from what I’ve come to learn. But we were hiking up a trail at Catawba Falls and then we entered a closed section of the trail. I didn’t know it was a ropes kind of situation so we’re climbing up ropes and going up a rocky kind of cliff. Joe: Let me just clarify for the attorneys out there that’s thinking they can help you. You entered a closed section of the trail; closed. Brad: I didn’t know. Here’s the thing, I’ve got some lawyer friends that have reached out to me about it and here’s the other thing the Pisgah National Forest is owned by the US government. So if you decide that you want to sue them just know that the US government does not take lawsuits kindly. And they take zero liability. So I had friends reach out to me and say you need to pursue this and then I was like I was in the Pisgah National Forest and they’re like no, that’s not going to work. You’re going to lose that. But basically, it depends on the state. North Carolina does not have very friendly laws for stuff like that anyway. It’s one of the least friendly states for that. But I hiked up, I saw a beautiful waterfall … actually and filmed in the movie The Hunger Games and that’s why we wanted to go up and see it. So we went up there, saw the waterfall, we needed to kind of get a move on it because we had hiked a lot longer than we had expected so we’re moving very quickly on the way down. Joe: You and your wife and kids or just you and your wife? Brad: No just me and my wife. The kids were at home. I vacated the ropes for a minute, I don’t … I saw a path; it seemed like a reasonable thing to do. It was only going to be like 10 ft. and honestly I don’t remember anything after that. I fell 40 ft. down a very rocky slope and I don’t remember anything until the paramedics and the firemen were there. They tried to life like me up they couldn’t do it. And I broke my arm, dislocated my shoulder, collapsed my lung, I had deep bruises and things like that. I did not have a concussion surprisingly. Joe: You got to thank God. Brad: Three and a half hours to get … yeah, I did. It took them to three and a half hours to get me out in to the hospital. Joe: Wow. Brad: And anyway thank God it was just a lucky situation, very scary for my wife. She was talking to me for a long time without me really knowing what was going on. For 45 minutes she thought she’s lost his mind. Joe: Well the first thing I think we all did a Quiet Light was you know thankfully you’re okay and we were doing little prayers for you and all that stuff. And then we start like man that guy is just not so bright going on the closed trails. For everybody listening, if anybody is foolish enough to do what Brad did, we bought him the inflatable … what do they call it, the inflatable? Brad: They’re like these big bubbles that you get inside with your family. Joe: We bought Brad a bunch of those and I started a petition here in North Carolina to change Catawba Falls to Wayland Falls but nobody listened. Nobody listened at all. Brad: Unfortunately. Joe: I’ve been there and next time I go again I’m not going on the closed trails I don’t think but. Brad: You may not know where the closed trails are. I didn’t know it was closed. Joe: Okay. I’ve been there because I know that it was like oh look that’s where the Hunger Games was filmed. Brad: Yeah. Joe: I’m going to bring a sign and I’m going to drop it in there. I’m going to take a sledge hammer and put it in the ground call and Catawba Falls and take a picture for you. Brad: Yeah. Joe: See if anybody takes it out. It could be there for- Brad: It was a crazy accident and I’m thankful for all the support I got. From Quiet Light, from friends of family, it was a … I recovered very quickly. I’ve got a pretty gnarly scar right here that is still … I’m hoping it’s going to turn the color of my skin is it looks like I got really depressed or something. Joe: He’s holding up his wrist ladies and gentlemen and it looks like he decided to take his own. Brad: Tried … that’s what it looks like. Joe: Is there a pin in there now? Brad: Yeah there’s a play and about a dozen screws in that arm but I’ve got full mobility back. I’m free of therapy. I can’t do pushups yet but I’m getting closer. Joe: And you did it all while we started at Quiet Light and you had listings and not a single client really knew what was going on and they … I mean it’s because you worked anyway which is amazing so that’s awesome. Well again Catawba Falls, I’m going to try to get it changed to Wayland Falls but let’s see if that happens or not. Brad: Good luck with that. Joe: Brad, thank you. I learned a lot. Brad: Thank you. Joe: I learned a lot about you and I appreciate your time. Hopefully, everybody here has did as well and we’ll keep doing what we did here at Quiet Light. Thanks, man. Brad: Okay thanks a lot for having me on. Links: Brad’s LinkedIn Profile brad@quietlightbrokerage.com About Brad Wayland on QLB

Two years ago, Brett Curry from OMG Commerce would not have recommended advertising on YouTube. But today, he sees it the way we now look back at Facebook. When cost was cheap and the audiences were huge. YouTube gets a billion views a day, a billion! Brett’s company knows all about advertising on paid channels…be it Amazon or the multitude of Google channels. Recently Brett has seen opportunities on YouTube that allow his clients to advertise on a fixed cost per acquisition basis (my favorite)! In this podcast shares what he finds works and what does not. No need to hire his firm…if you want to learn how to do it yourself, good news! He’s created a course with Ezra Firestone. See the show notes. Episode Highlights: YouTube has always been a great content platform. How recent ad types make YouTube much easier to monetize. Youtube is used as a product search engine more than people realize. Viewers (and now shoppers) on YouTube are actively doing something, these new campaigns can target people based on that activity. Nothing sells like video if it’s done right. Brett explains the pre-roll and true view options. The key tips on how ecommerce business owners can approach the daunting task of video ad producing that can be profitable. Some companies use agencies and others are hiring full time video people in house. Search behaviors are different on YouTube than on google. The integration of the platforms allows for hitting more people in order to make more money. Why Youtube is an invaluable re-marketing platform. If you give Youtube the right audiences to go after and you and you have a video that’s powerful, over the time the machine will start hitting that CPA target. These platforms can successfully follow the journey of the buyer. The importance of getting all the campaigns working together and connected. Transcription: Mark: The world of search engines has changed significantly since about 10 years ago right? Google has been the king for a long time. I believe they started around 1997, 1998 and they’ve dominated and kind of set the tone for what we think a search engine is supposed to be. But in today’s world, if you’re in e-commerce or if you’re in online business in any way you have to think about different avenues for search. For example, Amazon is the number one search engine for products at this point. But the number two search engine in the world is also owned by Google and that’s YouTube. For a lot of us especially those who have been in the online world for a long time we sometimes just think narrowly about Google because that’s what we’ve always done. But there’s a lot of other opportunities where people are actually searching and have that direct intent and that’s going to be YouTube as one of these things that we need to look at. And Joe I guess you talked to somebody who’s really been focusing on YouTube as an advertising channel to be able to acquire customers for a business and he gave you some insights into how to use this channel more effectively. Joe: Yeah I spoke to Brett Curry from OMG Commerce. I saw him do a presentation specifically on monetizing through YouTube. I guess the best way to explain this is once upon a time on radio I had a campaign, a niche model called Per Inquiry. And we would pay the radio station per inquiry that converted to an actual customer. It’s cost per acquisition that we call it now. YouTube has that opportunity now. So Brett really honed in on advertising physical product companies and doing it cost per acquisition … I’m stumbling like crazy here folks sorry, cost per acquisition on YouTube. It’s not something we think of out of the gate when we think of YouTube because we’re just watching the latest sports, concert, whatever it might be but people are starting to really use YouTube for searching for products and then clicking that link and converting. There are video opportunities where you only pay if someone watches the entire 30 seconds. That’s something else we talked about but the one that excites me the most is the cost per acquisition model when he gets into that detail. Mark: Now I think video is something that all of us need to start opening our eyes to. I think there’s just tons of opportunity when it comes to video. And you know fortunately, I think it’s a little bit intimidating for most of us. And I say fortunately because if you can get over that intimidation if you can get over some of the worry about “man this is actually pretty expensive to produce” there is a world of opportunity out there if you can start getting it. So I’m excited to listen to this because I’ve really only just toyed a little bit with YouTube advertising. I haven’t actually gotten in and tried to understand it fully so this would be a good primer. Joe: Yeah it’s great. And don’t fear the production costs folks because some of the best converting videos according to Brett are the ones that are actually customer produced. So consider that in terms of presenting to on YouTube. That’s it, I’m done talking. Let’s go see what Brett has to say. Joe: Hey folks it’s Joe Valley with Quiet Light Brokerage and today I have Brett Curry from OMG Commerce with me on the line. How are you Brett? Brett: I am doing fantastic Joe thanks for having me on the show. I’m excited to be here. Joe: You’re also a podcaster too right? You’ve got a podcast what is the- Brett: Yeah. I love podcasting and usually I’m the one firing off the questions and listening. Honestly, I think listening is the harder job of the two here. So I’m looking for just to talking up a storm here talking about YouTube. Joe: Awesome. Well, I want to talk about a whole bunch of things because I think we met at the … for the folks that don’t know we met at the Blue Ribbon Mastermind Conference in Denver. It’s part of … I’m going to get that chain of events here wrong probably, it’s part of the Smart Marketer Group, right? You guys … how long have you been part of that group with Ezra? Brett: Yeah. So I met Ezra Firestone at a Traffic and Conversion Summit event like six years ago. It was in San Francisco. It’s a long time ago. I met Ezra there. He was just launching his Mastermind Group called Blue Ribbon and I thought to myself this is a dude that I need to know. And so we kind of striked up a conversation, I joined the mastermind group, the rest is history. So I think that was I think years ago believe it or not. Joe: And I’ve been going to mastermind Groups and we talk about them here on the podcast whether it’s Rhodium Weekend or eCommerceFuel things of that nature. Blue Ribbon right up there for those listening if you can … if your business is big enough and you’ve got the revenue reach out. Find Ezra somehow through Smart Marketer probably right? Brett: Yes smartmarketer.com you got to consider it. I’m a huge eCommerceFuel fan as well. Andrew Youderian is a friend of mine. I think they do a killer job but yeah those two are right up there man. If you’re serious about e-commerce and growing check out both of those and you’re welcome Ezra and Andrew for the club. Joe: And for those listening if you’re not in a Mastermind group or you’re a buyer and you think how am I going to learn all this? It’s through these mastermind groups. They didn’t exist for me. I sold in 2010 as Ezra was saying I spoke to him on an earlier podcast. They really didn’t exist when I started and now they’re available for so many people to get so much more success I think than I had at the time. But listen I want to talk about OMG Commerce. I want to talk about you. You did a presentation at Blue Ribbon Mastermind on monetizing through YouTube and then kind of blew me away with the specifics of that and then all the other things that you do around that at your company. We want to talk about that. Can you give us … the people listening some background on yourself, on your company and how you started, what you do and then I want to jump into that. Brett: Yeah, absolutely. So right out of college in 2002 dating myself a little bit, I launched an agency; a small agency helping local businesses with TV, radio, and print; so kind of traditional old school media. I became a marketing junkie in college and I was introduced to Dan Kennedy and Jay Abraham and some of those kind of marketing gurus. I fell in love with the psychology of marketing and I kind of fancied myself as a copywriter for a little bit. And so I launched this agency, I started doing SEO in 2004 and somewhat just clicked. No pun intended it just fit my personality. I liked it and so I kind of became and SEO nerd. But still thinking about copy and the conversion rate and things like that. And then moved into AdWords and then really things took off in 2012 when I got hooked on Google AdWords and kind of … really we started our agency OMG, my business partner Chris Brewer and I we started the agency in 2010. But 2012 we kind of got hooked on Google Shopping. I wrote The Ultimate Guide to Google Shopping after months and months of testing and perfecting things. Shopify published that and then that kind of helped ignite the agency. And so since then, I’ve been speaking at events like Traffic and Conversion Summit and Ezra’s events in social media marketing world and internet retail and things like that. And so really the agency is built on driving traffic to e-commerce stores and primarily using Google Ads; so Google Search, the text ads, Google Shopping, Display Network, and more recently YouTube. I’ve always been a fan of You Tube. Recent ad types make it much easier to monetize and much easier to track and create measurable results. So I’m doing a lot with YouTube. And then kind of the other side of the business is Amazon. Helping companies with their Amazon ads as well and so … but I spend most of my time in the Google Ads ecosystem. Joe: Well I tell this story and I’m sorry for the podcasters that have to … listeners that hear me repeat this but you know I spent a lot of money on Google Ads and I didn’t have any experience. I didn’t have any training. And I think there are too many people out there doing that. They were like me. The problem is that I’ve discovered is that you try someone who claims to be an expert and in fact, they’re not. And they take your budget and they blow it up and you cost per acquisition goes up and your profit goes down and you know this is six months before you want to sell and all of a sudden the value of your business goes down as well. When you get up and presented … I knew first and foremost because you are at Blue Ribbon you are going to be top notch. But then I dug deeper. I sat by Chris, we talked for a while and you talked specifically about YouTube and I know that you can’t do that alone and that you’ve got to package everything else in there. But some of the things that you talked about were … and I’m going to let you dig into it and tell us about it, some specific fix targeted cost per acquisition and only paying if somebody views the full 30 seconds and a whole bunch of things that I don’t think is out there for the average person that’s doing all of the marketing channels themselves to figure out. So tell us about that a little bit. Brett: Yeah absolutely and I think I’ll just … I’ll set the stage really quickly if that’s cool just talking about YouTube in general. And you know I’ve been a fan of YouTube forever. It’s always been a great content platform. Everybody is on YouTube. A billion monthly users, average session duration is like 40 minutes which is longer though on Facebook. And the cool thing about YouTube is it’s full of a lot of learn, do, and buy moments. So if I’m on YouTube I’m actively doing something. I’m looking for how to fix my lawnmower, how to fix my washing machine although I try to avoid that at all costs and just pay people. But if I’m at pinch go to Google or go to YouTube to learn how to do things or researching products. That’s something that a lot of people don’t know is that YouTube is used as a product search engine pretty frequently where people are looking for unboxing videos and demo videos and things like that. And so … or just you know how to, my kids use YouTube all the time from everything to how to play the piano to … my 16 year old son now is looking at how to pick up chicks which will it make you proud or worried I’m not sure. But yeah you can learn anything on YouTube right? So when someone’s on YouTube they’re actively engaged in what they’re doing and so the beauty of that is you can target people based on what they’re doing on YouTube. But then like you alluded to now there’s these ad formats that just really make it powerful. And so it’s kind of combination now of better targeting than ever before so we can make sure we’re reaching the right person better than we ever have before on YouTube. Everybody is there but how do we get to the ideal person for a particular e-commerce business. And then how do we have like a bidding and ad format that people want to click on and want to take action on and we’re paying a rate that makes sense. And so that’s kind of the backdrop. But yeah, so you talked about only paying if someone engages. That’s called YouTube TrueView and so for those that don’t know that’s the pre roll or before ad. So if you go to YouTube to watch a clip from The Office or something and then there’s an ad that pops up before that or the place before that you’ve got five seconds until that magical Skip Ad button pops up. And so the way that works is if a user skips the ad before the 30 second mark or before the end of the ad whichever comes first then the advertiser doesn’t pay. So you know I could watch 28.9 seconds of an ad, click skip and the advertiser doesn’t pay a penny for that. And so … or someone has to click through to the sites. If they’re watching and they think ooh this is cool I’m going to click on the ad and go to the site and then the advertiser is charged for that as well but really an awesome concept. You know I used to in the previous agency days, I did quite a bit of TV and it was my favorite medium pre … before I got really deep in online marketing just because the power of video right? Nothing sells like video if it’s done right and so … but if you’re running a TV spot you pay for the spot regardless of if people walk out of the room or change the channel or whatever. With TrueView you’re only paying if someone watches or engages so it’s pretty powerful. Joe: Well let’s talk about … for the people that are listening and that have a physical product and let’s say they’re just doing Google AdWords and they wanted to reach out to you how did that … how does it start, how … to me the idea of producing video if that’s something you’ve never done is kind of daunting. How do you try to approach that? Brett: Yeah it really is and so this is what separates YouTube from say Google Shopping or Google Search ads which are just the text ads. You know a text ad that you can create in about three minutes. Or if you did research it takes a little bit longer than that but it’s really easy. Google Shopping, the ads are pretty easy. There’s just data feed involved, there’s product feed involved which can be a little bit tricky. But a video, man that’s tougher. You got to hire a video crew potentially. You got to hire an actor or you’ve got to be comfortable on camera, whatever. Ultimately though you really can create a video even using an iPhone if you wanted to but my advice on the video itself is be straightforward first. So I think … because we’ve all grown up seeing ads we have all kinds of ideas of what works and what doesn’t work. So we know the funny Super Bowl commercials that we like and so we think we need to recreate something along those lines right? So I need to come up with something like the what’s up guys from Budweiser. I’m a believer in direct response. So that’s the type of ad we suggest that you run because most physical product companies if you’re not huge a pure branding play is going to be tough so you want something that’s direct response. And so I prefer a kind of straightforward approach. But a couple of things you can think about is one, you do need to hook someone immediately. So that Skip Ad button comes up in the first five seconds so hook them immediately. So what do you got to say, what question are you going to ask, are you going to be like running up to the camera, are you going to be doing something interesting to make someone say okay I was going to skip because I don’t like ads but there’s something about this that I need to watch. So hooking them in the first five seconds is key. I believe you got to lead with the strongest benefit. So what is the benefit that your product provides? Is it time savings or is it status or what is that major benefit and then dramatize that. Bring that to life even if it’s just you talking and showing the product. So that’s important. You also got to incorporate some social proof. So do you have a testimonial, do you have an endorsement, do you have something … are you endorsed by somebody that is trusted by your marketplace; some kind of social proof. And I think and kind of part of this you want to show don’t tell you know. A talking head video can work but you want to show as much as you can. That is few of the things to consider to [inaudible 00:15:24.2] have to get in to but things like [inaudible 00:15:27.5] sort of moving the risk. What are the risks that someone has in their head before they buy? So if you’re selling apparel or footwear or something what if it doesn’t fit? Then what do I to overcoming some of those objections in the video is important. And then a really strong call to action, so like hey what do you … what do I want you as the viewer to do next? If you leave that … oh but this is just crazy to me, you know most people think “well it’s a compelling ad people will naturally click”. Not necessarily, you kind of have to ask them to. Like go here, get this free shipping code, or check out this, or watch this further demo, or join our email list to get a discount; something, some kind of call to action and then push people to do that. And the nice thing is there are some new ad formats that really make those CTA’s or calls to action pop. But that’s just kind of few of the things that make for a good video. But I admit making a good video is much harder than other ad formats, it just is. Joe: Through your agency do you guys have a referral program … people that you say okay these guys have done a good job and you refer people to agencies or do you find that the entrepreneur is creative and ingenious and can create a video on their own and make it work? Brett: Well, yeah it’s interesting. So we’re seeing now a handful of our clients are hiring full time video people because of their product videos. So video can be useful on a lot of ways right and different types of videos. So maybe I just have a pure product demo video and I put that on my product detail pages and then I’m cranking out little short clips for my Facebook advertising and then I’m launching maybe YouTube content that I’ll try to get to rank organically and then I’m running YouTube ads and I’ve got someone creating that. So surprisingly this is something that I don’t think existed with the size of companies we’re working with now. You know kind of two million to 10 million a year and really up to pretty 20 million whatsoever, a lot of our clients are in that range. Those companies now have full time video people. Joe: Okay. Brett: There are a few agencies I could name but we don’t do any of the creative work ourselves but I can make recommendations. Joe: So let’s go to that assumption then that the client has video … has access to it or produced their own, why YouTube though? Why … like when I go and I search … like I did a search today on how to export a profit and loss statement from Xero because a client said it can’t be done and I’d seen it done. I get them all the time. Oh yeah? Well let me send a video. So I did that and I sent him, I skipped the Quiet Light Brokerage banner ad because we don’t need to click on it. Brett: Yeah. Joe: But it never really occurred to me to buy through YouTube. So what … people know that when you do sponsored Ads inside of Amazon or you spend money on Google Ad Words or Facebook that there’s going to be a certain volume you can get to in return on investment. Is it worth it to advertise on YouTube? I know it has a billion viewers but how many people are really thinking products? And is it worth it; a bang for the buck? Should people be paying attention to advertising on YouTube? Brett: Yeah, the quick answer is this; absolutely. And this is one of those answers that even just probably two years ago my answer would have been a little bit different. It kind of would have been a maybe. Like I said YouTube has always been a powerful platform. If you’re a good content creator and you created good content and got organic traffic and then YouTube has always been a good source for running a business. But from an ad platform, I believe it’s just become viable for a lot of businesses. I would say most e-commerce businesses should consider it and that’s a relatively new development. So aside from everybody being on there and aside from people being actively engaged where like you’re looking at how to pull a report from … it was Xero? Joe: Xero. Brett: So how to pull a report, if there’d been an ad related to something like that maybe it would have captured your interest or maybe not. But you can target people based on what they’re doing on YouTube plus much more. So, of course, YouTube is owned by Google and so now you can target people based on their behavior that Google sees even off YouTube. So one of the options you have is keyword targeting. So if maybe I’ve got a new Xero alternative so better than Quick Books better than Xero whatever I’m going to … I want to woo people over to my new accounting software; which sounds like just the worst job in [inaudible 00:20:04.7] accounting software. But anyway we’ll [crosstalk]. Exactly, I think I just fell asleep as I was mentioning it. But so then I could use keyword targeting and I could target people looking for Xero and Quick Books and Quick Books Online and Quick Books online tutorial. And maybe I’d even target things like why is Quick Books doing this; like some pain points around Quick Books like Quick Books keeps crashing things like that. So those are some of things people type into YouTube kind of just to find a fix. Well then if I’ve got the alternative to Xero and Quick Books then I run my pre-roll ad for somebody watching a video on how to fix a pain point inside of Quick Books. So there’s this keyword targeting that’s based on content on YouTube which is really powerful. But then going to what I alluded to a minute ago you can also target people based on what they’re searching for on Google. So I think it’d probably be a toss-up like who has more information about you; Google or Facebook? I don’t know really. They both know everything about us. And so I don’t know about you, my search behavior on Google is different than it is on YouTube. Often if I’m going to YouTube I’m just watching music videos and stuff like that like sort of as in background even. But I search on Google for all kinds of stuff. So then you can target people on YouTube based on what they’re searching for on Google. So if I sell running shoes I can look at a whole host of search terms that someone maybe typing on in on Google and I can build an audience around that and then target those users the next time they’re on YouTube. Joe: So it sounds like if someone is doing any paid advertising on Google whether it’s AdWords or Google Shopping or whatever it might be that they need to think of YouTube as just what it is which is an extension of Google. They’re owned by Google. It is Google. Brett: Yeah. Joe: And all those same tools and resources are there that you just got to think visually. So it’s really the last couple of years you started to see your advertising work better and get … Google’s getting better at it to allow you to do a better job. Can you give me an example without naming any client names on in terms of what it’s done for them so that somebody doesn’t go “oh, wow, okay”? Brett: Sure. Joe: And what other channels within Google they’re also spending money on? Brett: Yeah absolutely and so I’ll kind of mention this first, I think YouTube is for a long time have been good at creating brand lift. So even kind of before some of the new targeting options and before some of the new ad options it was good at getting people to be aware of a product. So we’ll use Boom by Cindy Joseph because Ezra wouldn’t mind if I talk about it and we run all of the Google ads for Boom. But if we ran YouTube ads introducing people to Boom … let’s just say we had no call to action I think at the end which we wouldn’t do that but let’s just say we did, that would likely cause a brand lift. More people would start searching for Boom on Google. After watching the video they’ll be intrigued and say oh what is this let me check out a little bit more. And so that’s always been kind of the platform or always been a benefit of the platform. But then kind of beyond that the next thing I would recommend someone to do is look at using YouTube for remarketing. So for people that visit your site whether they go to product detail page only or whether they add to cart and abandon, let’s remarket to them. So let’s use YouTube as a remarketing platform. And so that’s what I’ve been doing for a while as well, taking our remarketing list like you alluded to all of this is built in the Google ads platform and it’s now rebranded as Google Ads, not Google AdWords. So it’s all in that platform so we can upload our remarketing list, we can start segmenting that and running YouTube ads to those people. So we typically segment break out site visitors, break out PPC viewers, break out cart abandoners, and kind of have different ads that we run from them. But then kind of beyond that we’re looking at a new format called TrueView for action. And you kind of mentioned this before too where you’re … this is where you’re bidding on a CPA basis. So basically what we’re doing is we’re telling YouTube hey I’m willing to pay X, I’m willing to pay 100 bucks or 80 bucks or 50 bucks or whatever for a conversion and over time YouTube gets really good at dialing that in. So if you give YouTube the right audiences to go after and you have a video that’s powerful over time the machine will start hitting that CPA target provided your site converts as well. Joe: Google TrueView? Brett: So as- what’s that? Joe: Did you call it Google TrueView? Brett: It’s TrueView for action. So it’s a subset of TrueView. So you could just run standard TrueView which is the ad format I talked about before where someone has to watch 30 seconds or the whole video or you don’t pay. So that’s kind of standard TrueView. With standard TrueView, you’re paying a cost per view. So you’re telling Google I’m willing to pay five cents, two cents, 20 cents per- Joe: Yeah, risk … there’s risk there but it sounds like the TrueView for action is look you’re not going to pay unless it converts which is- Brett: Yeah exactly. Joe: But is there volume there? Brett: There is immense volume and that’s one of those things where we’ve seen people be able to scale pretty quickly. So with Boom by Cindy Joseph, we went from not even really a channel to a pretty large channel quickly. And we were able to start kind of dialing in and hitting their CPA target within a couple of weeks. And then it will sustain that now for several months. Joe: What happens in the first two weeks when you’re … if you’re doing TrueView for action aren’t you always hitting that CPA target? Brett: No. So you’re not. And you give Google the CPA you want to hit and you set a daily budget. Joe: Okay. Brett: But the machine is experimenting in the beginning. And this is something where this is a little bit different than let’s say Facebook ads as an example I know … and I’m not a Facebook ads guy. I don’t run … I don’t run our Facebook even but I know there is kind of this thought that with Facebook ads you build a bunch of an ad sets and you let them … you know each one spends 30 bucks, if it doesn’t convert kill it, whatever. Really search pruning quickly. That doesn’t work on YouTube, not with TrueView for action. You need to give the machine time to learn. So you’re maybe going to be letting it run for seven or 10 days. Obviously, you could pause it if nothing’s happening. But usually that CPA, it’s going to be above the CPA initially and then it’s going to start getting closer and closer to it. So we found again with the right video, the right targeting you can usually hit your CPA target if you let the machine kind of dial in. Joe: Okay, and you guys don’t do any of the Facebook stuff. You’re focused on most of the Google platforms and then you do the Amazon platform as well. Brett: Yeah exactly. Joe: And is it because that you integrate the Google Shopping, YouTube ads, Google AdWords, PPC whatever they’ve rebranded it you integrate them all together. Brett: Yeah. Joe: Do you think they help each other? Is it Google has gotten to the point where is it intelligent enough to pull resources from one to the other to help improve cost per conversion? Brett: Yeah absolutely and then one of the things that Google just really stepped their game up in the last couple years in the last six months even is audience targeting. So being able to apply some of those audiences even to your search campaigns and a few of the audiences to your shopping campaigns. But it is all connected because if you think about it if I’m in product research mode, if I’m looking at buying a new … let’s say I’m buying a new [inaudible 0027:37.5] a couple of this things for a house and then I’m researching on Google then maybe after I find a few things I’m going to YouTube to watch a video or some unboxing videos or installation videos now I’m going back to Google. And so what you can do if you’ve got all of the campaigns setup and part of a … we call it a full funnel approach or a team of campaigns, we’re not viewing search and shopping in YouTube as this completely separate entities but how do they work together because they do. So if someone finds us on search or shopping when they don’t convert then let’s use YouTube as the remarketing vehicle. If someone discovers us on YouTube and they watch a video and they become engaged with us but they don’t purchase well then let’s add them to a remarketing list and target them with search and shopping ads. Because maybe someone learns about your brand on YouTube they don’t buy, their next activity is going to be I’m going to go to Google and search. I’m going to go search for this company now or find out more and so we can target them that way. So that’s another piece we look at as we create a list of people that have viewed a video as an ad. And then we layer that into our search and shopping campaigns. And we’ve seen this … let’s just go back to the Boom by Cindy Joseph example; we even created some campaigns where we only target people that have seen a video ad. And a lot of those people then go back to Google and they can’t really remember the brand name but they remember seeing the video or whatever like something’s caught their attention so they’re just they’re typing in a bunch of random things. Like make up for older women or you know things that would’ve been mentioned in the ad. And then we’re able to target them because we built a list of people that viewed the video as an ad but actually converted them to research a shopping campaign. So if we just think about it, if we kind of step back and think about our own journey like what’s my journey as a buyer? I really just click on one ad and buy. I don’t just see one ad for a brand new product I’ve never heard of and purchase immediately. That doesn’t happen. I’m usually going to search for something, be exposed to it, click around, visit, and then see another ad and then convert. So we would … we like to get all the campaigns kind of working together and connected. Joe: So let’s say that someone is managing their advertising campaign themselves and business is getting big enough to they want to elevate themselves to more of the captain of the ship instead of a navigator if you want instead of just focusing on one part like the marketing are there resources out there to learn everything you need to learn about for the Google ads platform within Google and outside of it or is it simply your 20 years of expertise that … and what, staff of 17 that allow you to be better than any Tom, Dick, or Harry that’s going to try to do it for their own business? Brett: Yes. So I mean there is a learning curve and I think the learning curve is a little steeper with Google ads than it is other platforms potentially. It’s one of those things where learning the basics is not that complicated but then seeing how everything interacts and how one change leads to other implications is a little trickier. So there’s a little bit of a learning curve but there are some good resources. So on the Google Shopping side, I wrote the Ultimate Guide to Google Shopping a few years ago. Shopify published that. It’s totally free. Joe: Do you have to update that on a regular basis? Is it changing? Brett: Yeah, I just updated it a year ago. I needed another round of updates. The core of it is still good but it needs to be updated. Joe: Okay. Brett: I’m working on a course with Ezra Firestone. We launched the beta version on all of Google Ads. So it kind of starts with- Joe: Oh, excellent. Brett: -that foundation of Google ads. Joe: That’s what I was looking for and I didn’t know that. For everybody listening, I didn’t know that by the way. Brett: Yeah. Joe: Because look some people are going to be hesitant to work with an agency. Brett: Sure. Joe: And historically I’ve been anti-agency although I owned one. I owned a media buying agency specifically for radio back in the day. Brett: Yeah. Joe: And my experience is as an agency owner is that you’re going to work really really hard because you want to client to keep spending money because you get a percentage of that money that he spent. So you want them to be successful but as an e-commerce owner, my experience was … God, they blew it, my gosh my cost per acquisition went way up. Everything is destroyed. They’re not paying any attention to anything that I said but what you did and what you presented was great and different. So that’s … I wasn’t going there but thank you for going there. So you’ve created a course on the Google ads platform with Ezra which will be done when? Brett: So probably by the time this … I don’t know when is this is going to live but it will … it’s launched in September of 2018 is when it will launch officially. Joe: Okay. Brett: So it should be available here pretty quick. Joe: So people can find that probably on smartmarketer.com right? Brett: Smartmarketer.com Joe: And OMG Commerce I would assume as well? Brett: Yeah well, have some links to it as well. Joe: Okay so let’s assume that a certain group of people are going to be I’m never working with an agency and they’ll Google and they find that there and they’ll get that expertise and training which is exactly what I want. I want people to get the best advice and expertise. Brett: Yeah. And one thing I would maybe add to that is I would recommend that everybody get educated at least to a certain degree. Even if you plan on outsourcing it or hiring internally for it, learn the basics of the platform. Learn how everything kind of ties together. Because then you’ll be able to analyze does this agency I’m going to be getting they know what they’re talking about, is this person that I’m hiring do they know what they’re talking about? So I think as a business owner you got to educate yourself at least on the basics and kind of see how the full funnel works and things like that. But yeah you don’t have to hire an agency. You can hire someone in-house and train them up and that could be great for some businesses. Joe: Unless they quit. Brett: Exactly, yeah. That’s true, yeah. Good to be diversified a little bit. Joe: I agree. Well listen, Brett I appreciate it, I appreciate your time coming on here just sort of unraveling the mystery of YouTube because again to me I’ve never thought about buying something there. Now that we’ve talked and I saw your presentation it’s every time I’m seeing an ad and I’ve actually watched a few which is interesting but I haven’t clicked through to buy yet. And I think that that’s going to change. And I think that people will get ahead of it and start learning it now and being one of the early adopters of advertising on YouTube. They’ll get ahead of the curve like those that focused on Facebook first. Brett: Exactly and I think it’s … I think Facebook’s going to be a viable ad platform for the foreseeable future. I think You Tube is going to be as well but I would liken where YouTube is now to where Facebook was a few years ago where it’s pretty affordable to be on YouTube. Those costs will go up over time as more people hop on to the platform but it’s a great place to be. And yeah we’ve seen from skin care to apparel to automotive to tech; all those verticals in e-commerce are getting good results on YouTube so it’s worth exploring for sure. Joe: Fantastic, so YouTube is today where Facebook was a few years ago. Brett: I think so, yeah. Joe: That’s a good way to end it. But for anybody that does want to talk to you, I think they can find you at OMGcommerce.com is that right? Brett: Yup OMGcommerce.com I’m happy to chat, happy to do an audit potentially of existing efforts and I’ll let you know how we could potentially help. So yeah OMGcommerce.com. Joe: Well put that down in the show notes and if this is out before the course is done we’ll go back and we’ll put it in the course after the fact so that those that just want to learn on their own and maybe bring it in-house can learn from that as well. Brett: Yeah awesome. Joe: Thanks for your time Brett I appreciate it. Brett: Okay thanks Joe I really appreciate it. [inaudible 00:35:07.7] All right see you.     Links: OMGCommerce Website ecommerce Evolution Podcast – Get to know Brett How to Use YouTube to Scale Ecommerce Ads – Online eCourse

I’ve seen Ezra Firestone speak at events, online, and in his “how to” courses. But until I got to chat with him one on one for 30 minutes about work/life balance, did I realize he’s the next Tony Robbins (OK, of the ecommerce world, and without the banana hands.) No kidding, Ezra is inspiring and full of passion. And he does what he does (rock 30 million a year in revenues without breaking a sweat) while giving back to others, focusing on family, and taking care of his health. If you’re are a corporate exec wanting to live the ecommerce lifestyle, Ezra’s approach is spot on. If you are an ecommerce owner and want to be the “navigator” of your business instead of the jack of all trades, listen and try to really hear what Ezra is saying. It will make a difference in your business, your bank account and your family life. Episode Highlights: Highlights from Ezra’s unique upbringing and how he grew up with e-commerce. We follow the journey of his professional life from poker to yoga to where he is today, earning thirty million per year in revenue. Ways the apprenticeship model can be beneficial to young entrepreneurs. Ezra reveals the pivotal moment where he understood the freedom he could achieve from acquiring a skill and mastering it. How Ezra found his “mastery” in e-commerce after trying several things. Every type of e-commerce business requires the same kind of marketing. All the marketing that goes with the product: before, during and after is what smart marketers need to focus on. The easiest business to run at scale is the physical product in e-commerce. The importance of going premium in e-commerce. There are buyers for every level of the market. Why Ezra chose not to sell on the subscription model. Using consistent ongoing marketing content in customer communication can generate revenue by sending the customers back to the website over and over. Ezra describes how he made the transition from driver to navigator. The importance of setting boundaries. Work will fill the time that you give it but it is necessary to scale in order to create balance. Balance as an entrepreneurial leader allows you to give the autonomy to those around you to step into roles that they can be motivated to succeed at. Ezra runs his business based on the practice of permaculture. Serve the world unselfishly and profit, that is his philosophy. Transcription: Mark: I saw an ad on Facebook the other day Joe and it made me think of our guest today. The ad was for anyone … any guy who has just a regular hairdo like I do and it was a man bun attachment. You could actually buy a man bun attachment to put on the top of your head if you wanted to have a man bun. Joe: Don’t say his name now, don’t say his name. Mark: I want a minute here and think who in the industry … in the world of marketing is known for his man bun? Joe: You know when we had Syed Balkhi on the podcast I actually went out and bought myself a Florida gator hat to wear during part of the podcast. I seriously thought about going on Amazon and ordering a man bun and putting it on for this podcast. That’s what I wanted to do. But you know what I don’t know the guest well enough. I’ve seen him at events and we were a host, we’re not a sponsor on his last event. Today we’re on this podcast is the first time I really got to sit down and talk with him for 30 minutes or so. I guess we can say is name now is Ezra Firestone. If you don’t know his name where the hell have you been? Because essentially he is … in my view he’s the Tony Robbins of the e-commerce world without the banana hands if you’ve ever seen Shallow Hal. He’s very impressive. When he starts talking you just sit back and listen and you go “What? Really, wow that’s incredible. That’s incredible.” He’s so full of energy and so passionate about what he does that you would think that he works all the time. And that’s kind of the takeaway from this podcast for me. There are lots of great insights to how to run a more effective e-commerce business in different channels and philosophies that someone like Ezra applies. And look he’s doing 30 million dollars a year in revenue growing month over month and does incredible things. He does not get out of bed … well, I shouldn’t say bed; he does not start his day until 10 o’clock in the morning. And that doesn’t mean he works until 10 o’clock at night. He works maybe till 5 o’clock unless he’s out doing events; like he’s going to be at Blue Ribbon Mastermind next week which is just incredible … doing 30 million a year in revenue and not working 40 hours a week; a really impressive guy. Mark: Absolutely you know I have a confession to make. You know these courses, these e-courses online that are super expensive, I usually look at these and I’m like yeah who in the world would ever pay for this? So my confession is this, I’ve actually bought one before and it was one of Ezra’s. It was on Facebook Marketing which is a little bit off from what you’re talking about. But I can honestly say it was worth every single penny. I think those who have actually gone to Ezra’s events and listened to his advice bought one of his courses and have followed him. He’s big. He’s known because he’s a real deal. Starting work at 10 AM is an awesome testament to the idea of this work life balance and making sure that we’re working so that we can live our lives. We’re not living so that we can work our lives. That’s awesome. I want to hear this because right now I’m working so much and Joe I know you are too. So hopefully you did pull away a few things from this as well. Joe: I did. I did and people don’t want to hear you and I anymore so let’s just go to Ezra. Mark: Let’s go. Joe: Hey folks it’s Joe Valley from the Quiet Light Podcast and today I have Ezra Firestone on the line with me. Hey Ezra how are you doing? Ezra: Happy to be here man. Thank you so much for having me on the show. I love doing stuff like this. Joe: So so glad to have you here. You and I have … we’ve been to a couple of events together, I’ve been to your Smart Marketer and Blue Ribbon Mastermind but we’ve never had a half hour to talk to each other so I’m loving the fact that I got your crew to schedule this. So thank you first and foremost, I know you’re a busy guy. As I mentioned earlier we don’t do a fancy introduction so for those that don’t know who you are if you could tell us a little bit about yourself and your background that’d be fantastic. Ezra: Sure. Thanks. I am currently sitting in a presidential cabinet room, so that’s my current location in the world. Joe: For those listening and not watching, get online and look. Ezra: Yeah get up take a look. This is actually an off … my wife and I bought 76 acres of land about 20 minutes from here that we’re intending to sort of develop and build a home on and have kids on and stuff. We’re renting this home and the person who lived here before was like some kind of a lawyer or something. And this room … it’s all cabinets and for me for some reason that is confronting. Like I don’t know why but I walk into this [inaudible 00:05:02.0] in my office and I love … I love it. I love that I have a space where I can work but all the cabinetry it kind of freaks me out because it’s very not … much not my vibe. So I’m like putting in plants, I’ve got like a skateboard over here. You know I’m kind of trying to make it feel a little less intense. Anyways a little bit about me business wise is I never went to college. I went straight from high school to New York City to play poker for a living which I did really well as a teenager and into my early 20’s. I was really fun but eventually, I sort of came across the concept of not trading time for money and began looking at building systems to generate revenue and resource for me without my direct time input all the time and sort of fell into e-commerce. Because you know e-commerce was really coming up in society at that time. We’re talking 2004, 2005, 2006. It was my first years in e-commerce and I’ve been fortunate enough to grow up in this industry. And this was a time before events and before podcast and before this industry was … everyone, when you said you were an Internet marketer they thought you were into porn or gambling. Joe: That’s right. Ezra: It was not looked at as a good thing. And so long story short is I’ve been doing e-commerce full time for about 13 years. I have grown and sold several companies. I currently have four different brands that generate about 25 million a year in revenue and 70 employees on my team around the country. And I’m just a guy. I’m just some random guy who loves this stuff. I really really love it and I think timing wise I came into it at the right time and fell in love with it at the right time and have been putting my full energy and attention in the direction of online businesses and e-commerce in particular physical products. Although I do have other business models e-commerce is my most successful model over the last decade. Joe: That’s impressive. First and foremost the fact that you didn’t go to college and you went right to life and you’re a professional poker player. I don’t tell my kids this, as I mentioned before I’ve got two boys, 14 … oh almost 15 and 17, some of the most successful people I know didn’t go to college. One of the guys I worked with up in Portland Maine, Rob Graham if you’re listening, absolutely one of the most successful people I know and he just … he got it. He worked hard, he was smart, he used common sense and intelligence which you have to have a combination of so kudos to you. Ezra: Thanks, man. By the way, you can’t give me too much credit for that decision. There were no colleges that would take me with my problem. I just didn’t fit the mold. I sort of always had this idea, you know I haven’t … I had an alternative lifestyle. I grew up in an intentional community in the Bay Area of California with flower children hippie parents and so I kind of had some alternative views on life from my upbringing. And one of them was that the school system really felt like a system that was farming me into a model … into a workforce that I didn’t want to join. You know sitting at a desk for eight hours a day and then you’ll be trained to go sit in the cubicle eight hours a day. And I believe that in life you get what you want from people who have it. That’s how … you find someone like you Joe and you learn about how to sell businesses from someone who is doing that. And I have always sort of believed in that apprenticeship model. And you know I looked around at college, I mean I attempted to get in, nobody would take me but there was like nothing there for me you know. The teachers didn’t have anything that I wanted. I couldn’t really see a future for myself there and I was a very good hustler. I always had little businesses and I was the guy at school … I almost had, I would have to go on to those stories but I always had something going on to make money because we weren’t rich. We grew up without much means and I always had this goal of generating resource so that I could use it for causes that I found noble like taking care of my family and taking care of my community and participating in the world in ways that you can only do when you have access to resources. So I always kind of had my attention on that and yeah I fell in to entrepreneurship sort of because of that. Joe: So if people are reading in between the lines and the threads and lines here, we’ve got somebody that … you used the word hustle, you know I think the harder you work the luckier you get. You take from people who have it, in other words, you associate from … or with people that they can help you and you’re in turn helping them it’s never a one sided- Ezra: Totally. Joe: -you would think. And the noble cause is giving back. I have to ask though when you give the visual of 76 acres that you and your wife have bought, you’re going to build a home and when … I just what state are we talking about? I keep hearing New York and Hawaii but I think you’re up in New York. Ezra: Yeah so I live in upstate New York now, about two hours north of the city and I grew up in Hawaii and California. Moved to New York at 18 to play poker and just fell in love with the East Coast. I met my wife when I was 20 and this is kind of where our life is and where our community is and our friends are and just sort of I’m a big fan. I love it, it’s a really really good place and yeah we got our problems, we got ticks and we’ve got the winter and like there are things you know. But it’s like anywhere you go there’s going to be stuff. Joe: Well you can have your events in the southern regions of the country so that you can get out of New York when it’s 10 degrees and 18 inches of snow out there. Talk to me about that transition that you had from okay online poker or playing poker up in New York is not cutting it and you wanted to step into the e-commerce world, did you … was there a day, a moment, a person that you met that made a difference and you said okay this is the path I think I’m going to try it? Ezra: Totally. I think that entrepreneurs, in general, are chasing some form of freedom; financial freedom, location freedom, freedom of where they can spend their time and they’re running away from pain in general. And then you kind of reach different levels of entrepreneurship that I’ll talk about in a minute as I’ve gone through all the phases of like I started … my wife didn’t like the idea of me being out all night sleeping all day under fluorescent lights with a bunch of degenerates just eating Butterfingers and just being like a New York City underground poker scene guy. I mean that is not an attractive package so she wasn’t to excited about that so I took what I call a square job where it was one of my first ever jobs where I actually worked for someone else running this yoga studio in Manhattan. And this was at a time when Bikram Yoga was still in its heyday. It just kind of like we’re talking 2007, I was running this studio. It was the biggest Bikram Yoga studio in Manhattan. I was the manager, the youngest manager. I was 21. I ran the whole thing and this was before everyone found out that Bikram was a creep and a rapist and the whole kind of Bikram thing fell apart. It was sort of as yoga was going main stream in society and that was a really fun gig being in service that … you know in the world service running a studio. But man I would be there 60 hours a week and I didn’t like not having the … not being able to have choice in where my time was spent. And so that was the initial sort of pain point that pushed me towards man the poker gig was better than this because I had more flexibility of where I’ve got to put my attention. And I think that in life what you put your attention on grows and what you ignore gets smaller. You put your attention on your health it gets better, if you ignore your health it gets worse. If you put your attention on your relationship it gets better. If you ignore it, it gets worse like … just where you’re directing your attention is everything. And I think that really as a human being the skillset you want to develop is the skillset of mastery which is simply the willingness to put your attention in one area consistently over time. Pick up the instrument for 30 minutes a day after a month you’re better at it. It’s a willingness to place attention and direct it consistently over time and I think that … so I kind of was playing poker for a living and I met a guy. Now, this guy was a really fascinating guy and he was a coach and a coach of coaches before coaching was mainstream. So now you know about relationship coaches, health coaches, life coaches, business coaches, coaching has really penetrated society as a mainstream concept. Back in ’04, ’05, ’06 it really was not that big and this guy was an early life coach. He’d started the International Coaching Federation one of these things he started that was a life coaching sort of governing body. And the thing about coaching is there is no real governing body, any schmoe off the street can call themselves a coach and start charging. And that is both good and bad, right? You end up with access and to opportunity for people but also some people are you know schmucks and not so good at it or they’re selling you stuff … you know they’re not qualified. Anyways long story short this guy … we’re talking ’05, he was selling business opportunity information products, e-books, digitally delivered courses, DVD sets, and these were how to become a life coach, how to start a life coaching business, how to make your own money and have a practice as a life coach. And the way that he generated visibility for this offer was with the search engine optimization which was the traffic source of the day for internet businesses. You would rank on Google and you would buy query based traffic from Google Ad Words when someone typed in a search query like how to make money he would show up. And so I taught him how to play poker and he taught me search engine optimization. And that was like my first foray into … you know this guy worked from his laptop, he was making a bunch of money and I was like men his life and his production cycle is a much more effective production cycle than mine. If we’re looking at like we both have the goal of generating wealth, the way he is doing it is far more appealing than the way I’m doing it sitting behind a desk selling people water and coconut water and being yelled at about how we don’t have any towels. It was like your hustle is smarter man you got to teach me this. So I taught him how to play poker he taught me search engine optimization. I ended up taking over his business and running this life coaching information product business, learning about things like landing page optimization and conversion rate optimization, sales webinars, and product launches, and upsells, and just like traditional direct response internet marketing as it relates to the sale of information. And this was really where I cut my teeth as a marketer and I love that business. It was a lot of fun. And ultimately once I had developed the skill set of the ability to generate visibility for an offer which was not that hard back then, it was buying Ad Words and doing article marketing, link building, and SEO, I thought to myself man selling information is wonderful but it’s got a couple of downsides which is you’re reliant on a single influencer. You are only as … you only have as much value as the next month’s cash, it’s not … you can’t sell the thing. It’s not an asset, it’s a cash flow business by its very nature because it’s built around, in general, a particular persona and you can’t ever sell that. And there’s a number of reasons why I wanted a different model and I tried a whole bunch of them. You know I had a seven figure services agency. I currently run a multi seven figure software as a service business. I did coaching and consulting. I did development for people. I’ve done all kinds of models and e-commerce appeals to me as the number one model and has been my most successful model and the model that I’ve enjoyed most for a number of reasons and I’ll go through those now. I don’t even know if this is the answer to your question. I’m kind of rambling. Can I tell you about why I like e-commerce? Joe: Keep going, please I love this. Ezra: So if you look at the three main areas that result in a business’s success … now I will determine a business at scale as a business that’s doing between half a million and a million dollars a year and has at least three employees and consistent processes. I’m going to label that as “scale”, so being someone who has run probably 10 different business models, you know affiliate marketing … I’ve done everything in the last 15 years or so. At scale, e-commerce is my favorite for a number of reasons. When you look at what I believe to be the three things that you’ve got to have in place to scale a business there’s … the first one is product. You need supply chain; you need the ability to produce this product at scale in a way that is not going to take over your life. So if you look at e-commerce, I literally sell tubs of goo. Okay this is not a tub of goo this is a stick of goo but basically, it’s a plastic stick there’s some goo in it. I mean and you can see here on the visual this is very very good goo, it’s handmade goo. Joe: It’s like fantastic all natural goo. Ezra: Yeah, it’s really really good but it’s like I got a tub and I got some goo and I got some labels right? At scale I buy more tubs, I mix more goo and I have more labels. Now let’s look at product and supply chain at scale for software as a service which are also sold at scale. Software as a service I need front end engineers, back end engineers, QA’s, I need to actually be creating new code and updating the product and integrations all the time. Like the product is morphing every single week; it’s not the same product. It changes every week and then whatever I change breaks and then once I develop the product I have to document what I did for the people who are actually using it. And then I have to train and now we move into the second pillar; support. So you have a product you want to ask me something about that product? Joe: I want to point out that the products that you have in your hand also they get used up and reordered and auto shipped so it’s a key differentiator between selling a water bottle [inaudible 00:18:06.6]- Ezra: Hey smart marketer all right. Joe: -versus a tub of goo. Ezra: [inaudible 00:18:12.7] is I mean obviously subscription based revenue things that are consumed is really really phenomenonal. If you look at information marketing the beauty of the product side of selling information is you create it once and then you don’t have any more cost of goods. Every time I need to buy another one of these it cost me six bucks. When I create an informational course, I create it once and I can continue to sell it but the product goes bad after about six months to a year because it’s outdated information. It’s not self-help. I mean I sell very specific here’s how you run Facebook ads that might need to be updated every six months. So it’s very hard to keep that product up to date. Services, I struggled with the product side of setting boundaries. I had a multi seven figure consulting agency doing advertising for e-commerce businesses back in ’09 and my problem was always around where does the service end? People would ask me for more. I would then do it like I just didn’t have a … I wasn’t good at boundaries and so I found that product very hard to fulfill on and as much as I had a very hard time. And this is maybe not other people’s issues, I had boundary issues and it’s therefore I failed as a services agency and I did well but like the model was not super profitable because I could not figure how to set boundaries. So as far as the product goes e-commerce has been the easiest one to scale without my direct involvement. And I’m looking for the ability to generate wealth and resource and have the most pleasurable model possible. And when you look at the most pleasurable models to run for me it’s e-commerce. Let’s talk about the support side because as your business scales you have to engage with and support your customers. And with software as a service, those support people need to be very high level. They need to understand the software, the highest level and be able to talk to customers about it. It’s way more intense than support for e-commerce where it’s like what’s in the product, can I get a refund? You know I mean like the support is not anywhere near as high level for e-commerce. So if you look at I have a 1.5 million dollar a year in annual recurring revenue software as a service business that I launched about 24 months ago it will be about 2 million this year and 20 something but the point is that business at 2 million dollars a year has double the amount of employees that BOOM! does at 20 million dollars a year. Double the amount of employees at only 2 million a year because I need people for the product; i.e. front end, back end, engineers, QA people, project managers, I need more support people for the number of customers than I do for BOOM!. So support is something that you have to figure out and support on the agency’s side if you’re running an agency is very difficult because you got to get on the phone. You got to talk to people; you got to show them results, you’re the punching bag when things don’t go well. It’s very difficult to be … do services well and on the support side it can be really tough. So support for e-commerce is easiest for me in my experience of every model that I’ve been involved in. And then the one thing that e-commerce requires is marketing. Every other model requires marketing as well, that’s sort of the third pillar right? Product, supply chain, support, and marketing; I mean really this is like what we are doing at the end of the day. I mean there’s other stuff but like everything kind of is an offshoot of one of those. So the marketing side which is storytelling, sales funnels, content, copywriting, social media, all this kind of stuff is what I excel at; that’s my real specialty. It’s one of the reasons why every model that I’ve engaged in I’ve done some kind of well at because I understand how to comment on a collective experience. And so this is my frame for it. I feel like every business that I have is serving a particular group of people who are having a collective experience and my goal as a marketer is to comment on that experience in a way that resonates with that particular group of people who’s having that experience and then push them in the direction of my products ultimately. And so the example you know this product line is sold to women over 50 who are all having the experience of aging and everyone telling them that that is wrong. That’s the group of people and that’s the collective experience they’re having and then I comment on that with my marketing. And so that for me is the same with every business. Every business requires the same kind of marketing; creating videos, amplifying them via advertising, creating sales funnels and technology stacks that push people through a 60 to 90 day sales cycle with retargeting, and then once they buy having content marketing and engagement to keep their attention and then up sells and cross sells after they’ve consumed with constant content post purchase all of that stuff. And so since that is what I excel at is the marketing side and then I’m looking for okay you know and some people struggle with that but that just happens to be my particular skillset. The model that I am most in love with and I think is the easiest to run at scale is physical product e-commerce because the supply chain is easy and the support is easy and marketing is the same level of difficulty as any other business at scale. Joe: That’s a good point. You know I never thought of it. I was at a Mastermind a year and a half ago, someone got up on stage, talked about importing from China and she went into such detail about how important it is to determine the thickness of the corrugated box when you’re importing from China. For when it’s on that container ship, when it gets to UPS, when it gets to the fulfillment center and all of it … I got to tell you I practically fell asleep and said to myself I never ever want to own any physical products e-commerce business again. Ezra: Don’t import from China. I don’t. Joe: Don’t import from China. I didn’t. I had nutritional supplements and it’s all US based. So I think it’s the ideal business model if you’re an e-commerce is something with a consumable product recurring revenue that is manufactured here in the United States. Ezra: I would agree and I would also argue that if you look at e-commerce you might as well go premium because there’s buyers for every level of the market. Let’s say you have supplements that cost $10 a bottle versus supplements that cost $90 a bottle. I’m always going to sell the $90 a bottle. The reason is it’s about the same level of difficulty to generate the sale. And if you go premium you have much more margin that you can then reinvest back in to better product, better score, and better marketing. And so I fall more and more … and you look at the companies that are scaling, Purple Mattress like a lot of these companies have discovered all birds shoes for example by $90 … $5 a pair, it cost them like 10 bucks, they got $80 of margin to spend on growing the brand. So I really believe in premium, consumable … and it doesn’t have to necessarily be consumable but line expansion, so if you are selling water bottles also have water bottle coolers and you know what I mean like [crosstalk 00:24:25.2] expand the line but- Joe: And an expansion of that line that is something that can be shipped on a continuity basis. Ezra: Yeah, ideally for sure. I mean listen I don’t sell subscription. There’s no subscription in my brand though 40% of my revenue comes from repeat customers. Joe: So why the choice not to sell subscription? Ezra: Well, you don’t necessarily need to actually have someone on a credit card ding every month to have a high level of repeat business. All you have to have is really good marketing. And my particular demographic is afraid of subscription. And as much as they’ve experienced a whole bunch of people not letting them off subscription when they get on subscription … so I get all questions every day like is this subscription? Can I cancel my subscription? People don’t want to feel obligated, they want to come back and buy when they want to buy. And my view point is that you can have … and my experience is that you can have a recurring business model without actually having people on subscription programs like I do with this product if your products are worth it. Joe: And the product in your hand and this is from experience, not everyone’s going to go through that product in the same amount of time. And so that 30 day renewing charge to the credit card is going to be too quick for some, just right for others and too long for others. So you’re an expert at reaching out to them and giving them what they need is hey it’s time to reorder at click, reorder … that’s your … instead of auto shipment you’re reaching out to them with I would assume an automated email campaign or through a messenger or something like that. Ezra: Well, we do consistent ongoing content. So we’re always sending out videos and articles and so we could generate a lot of revenue just from sending people back to our website. Joe: You mean you’re helping customers? Ezra: Yeah, we’re adding value to their lives by commenting on the conversations that they’re already having. Joe: So to the newbies out there listen to that, adding value to their lives by helping them with the information that they have and making their lives better. That’s ideal marketing right there. Ezra: And every six weeks we run a sale event. And I would say about 70% of our revenue from repeats comes from those sale events every six weeks with those sale events and 30% comes from just the random content emails. Those sale events work a lot better when the audience is engaged in ongoing content. So then when we do ask them to buy something, they’ve been hearing from us, they’ve been engaged with our content, they’ve seen our videos on Facebook and their feeds that are just interesting fun videos that are about beauty and help and stuff like that. And then they see this oh they’re having a sale, I like these people, I know these people, I engage with their content every now and again. So the ongoing content strategy actually acts as a supporter of our ongoing sales. And when you do the sales every six weeks without the ongoing content they don’t work anywhere near as well. Joe: You know it’s almost like you just said how do I help more people not how do I sell more product. Ezra: I want to do both but yes. Joe: By doing the first you’re doing the second. So it’s more of a mature, seasoned approach to growing a brand where you’re helping more people and generating more revenue. That’s the end result and I’m saying this in a way that sometimes I see businesses from all shapes and sizes, we’re doing four to five valuations a week and there’s a team of eight of us here at Quiet Light and so we see a lot of different variations of businesses. And the toughest ones to sell are those that are just trying to make a quick buck. They’ve built a little … slapped their brand on it and they’re to get it out there and they’re going to get eaten up alive by guys like you in time. They can make a little dent but it’s not going to last. What you’re doing is something that I think is going to last and eventually will build a much bigger value and someday have a lifetime … if you ever choose to a lifetime event sale where you can say okay I’m done. I don’t really ever need to work again but it sounds like you’re full of passion, you’d probably be working for a long time. Ezra: Yeah, I feel like if you like what you’re doing and you’re enjoying it and you have a nice balance … because the problem that most entrepreneurs experience at some point and I can recognize this from across the room at an event and everyone goes through it at some point in the entrepreneurial journey or at least my experience has been like everyone I’ve talked to and I’ve talked to thousands of entrepreneurs that have gotten to this place at some point which is burn out. Joe: Yeah. Ezra: They’re overwhelmed, overstimulated, they’ve taken on too much responsibility, and they feel at the mercy shackled to their production cycle … shackled to their business operation. And you know my big transformation in the last two years has been going from driver to navigator. So you know I spent my career driving on the road, taking turns, doing everything and as I’ve scaled I’ve seen that really like my most valuable skillset is that of the person who navigates the ship. If you’re on the road making the turn you can’t see the mountains in the distance. And so at some point you have to make the transition or at least part time the transition to a person who is setting strategy, who is reviewing what’s going on, who’s going out and meeting new people and bringing in deal flow, who’s actually like holding the container and the vision for the operation. And then reviewing what the team is doing and delegating responsibility and giving autonomy and freedom to the people around you to step up in the roles like lead copywriter or lead advertiser or lead project manager or you know all the stuff that you might be doing yourself. And I think that when you are able to do that it affords you the ability to relax a little bit and kind of have a little bit more space for your business. The other thing I will say that people don’t do enough of is set real clear boundaries around their work life. Because as an entrepreneur, particularly as an internet entrepreneur your business is with you at all times. I’ve got my cellphone on my hand but if you … you know it’s like your wallet, just always with you and so you don’t end up with separation between your life and your business. And when you look at the people who are burned out you find that oh they’ve been ignoring their bodies and their health. Oh, they’ve been ignoring their relationships and their intimacy and their connection and their social life and their hobbies. Oh, they’ve been ignoring like the home front. Like it’s … the burnout stems from lack of balance between production cycle and other cycles. And work will fill the time that you give it, it really will. It will fill whatever time that you give it. So I don’t actually put my attention on work until about 10 AM and I stop around 5:30 or 6, that’s my time frame. I wake up, I move my body, I meditate, I hang out my wife, we have breakfast, we do our little morning thing. It’s super fun. A couple of hours in the morning where I’m just partying and having fun and then I start out my work day and I’ll work for a couple hours and then I’ll have lunch. I’ll put in a couple more hours and then I’ll stop and that’ll be it. And I’ll enjoy my evening and my … I do that four solid days a week, sometimes five, and sometimes I don’t work at all Friday, Saturday, and Sunday, sometimes I do and it’s like you might think oh like my business is to crazy I can’t actually do that. I promise you if you do not start working until 10 and you stop at 6 everything that important to get done you will get done. And that’s so much working time that is your whole life man, 10 to 6, four days a week it’s like you are asking too much of yourself if you’re trying to put more of that in your production cycle. And then look I understand that sometimes you’ve got to run 14 hours a day for four weeks in a row because you’re doing a product launch. It’s like okay … cool but that … it’s a marathon, not a sprint. [inaudible 00:31:25.8] explain this thing you’re going to fail. And I can tell you that as someone who has gone through the stages of entrepreneurship from working off the couch with a full time job moonlighting the business to now running an eight figure set of brands with 70 members and a lifestyle that I really really enjoy. I’ve been there and you really … if you don’t set the boundaries and don’t set the container it will not exist and the work will permeate your entire existence and you will have no separation from it and you have no relaxation and no space. And a lot of times your best ideas come when you’re not working. When you have space and you’re enjoying yourself. It’s like it is necessary to scale to set constraints around your work life. And people are unwilling to do this because they feel it will be a detriment to their success. But actually in my experience and the experience of everyone who has done this that I know it works the opposite. Joe: And a lot of folks that come from the corporate world when they’re putting in 50, 60 hours a week traveling all over the world and they just want to get out of the rat race and they want to be an entrepreneur. And they buy an online e-commerce business and they feel like they need to put in 40, 50, 60 hours a week. And I said look the guy that you’re buying it from has been working 15 hours a week, you’ve got some learning to do so just maybe cap it at 25. But don’t work to the point where you’re trying to fix things that are not broken, just learn. Go to events, go to Smart Marketer and things like that. You just don’t have to work that much and you’ve worked so hard that it’s time to take care of your own health and wellness as well. Ezra: And I think that totally and like hey go for it put in a full eight hour day or 10 hours a day multi work weeks as you’re getting in to the game but like at least have the goal of setting some boundaries and containers around your work life because you will be a happier person. And like what is the point of all of this? Is the point just wealth creation because mine certainly is not. I would love to generate as much resource and I’m using resource as a lingo word to describe generating wealth so that I can then direct that resource towards causes that I find noble. Take care of my community where I grew up, take care of my family, provide a lifestyle for my wife that she’s really excited about and our family, do other things that are … that have meaning to me like saving lands and all kinds of stuff. So not a lot of people have figured out how to generate resource, everyone is failing at this. Everyone thinks that success is the goal and they’re running in the direction of success and most people are failing at it and most people are miserable. And it’s like the goal … fun is a much less popular but more fulfilling goal than success. So if you can figure out how to have fun and enjoy yourself which means setting fucking boundaries around your work life and having hobbies and having a social life and taking care of your body you will have more success. You’re guaranteed to be a winner if you’re chasing a good time and fun. You’re not guaranteed to have fun if you chase success. So it’s like what the hell is the point? What are you doing person? I want to grab you by the shoulders and smack you around and say listen, stop it. Focus on enjoying your life. And yes but obviously focus on the production cycle and the success. Joe: We’re not talking about being poor and happy we’re talking about a combination of both [inaudible 00:34:37.5] which are successful businesses with recurring revenue models and a very happy and healthy home life. I think it’s amazing that you really generally don’t start work until 10 unless you’re out at an event to a sponsorship or something like that and then you’re walking away. Do you actually put that device down and walk away; that phone that’s in your hand? Ezra: Oh yeah. There’s no phones in the bedroom dude. Turn off the computers, get off the digital medium. I mean you’re shackled to it, man. You’re on it all day every day, give yourself a freaking break and all of a sudden you feel better and life is better. And you hop on in the morning and you respond to the emails and the slacks and then you start creating. I kind of use my morning time for my creation, strategy, content you know I create a lot in the mornings and then like throughout the rest of the day I’ll be … I’m at a place in my business now where I have a lot of reviewing and talking to people about what’s going on. And my job is a lot of like sort of directing, hey okay yeah this is good let’s move it over here. I’m doing a lot of like kind of holding and sort of directing things and if you don’t have the visual of my hands [inaudible 00:35:39.8] but … and that I find is so easy to do in the later parts of the day. And in the early parts of the day, I do my creation. Joe: Creation as in … you like, what does that mean you’re? Ezra: Well creation as in like for me- Joe: Like creating content? What is it? Ezra: Yeah. Well for me it’s like thinking about marketing campaigns, looking at strategy, thinking about what we should be doing, thinking … anything that involves thinking of new stuff or doing new stuff or like you know I do a lot of … for my SaaS business and my information marketing business I do a lot of content creation and blog videos and webinars and sales videos and writing scripts. And I do a lot of creating things and also creating strategies. And I find that that is easiest for me in the early parts of the day and then in the later parts of the day reviewing stuff that other people did, talking to them about it, directing things just a little bit. I know it doesn’t require as much focus. I mean it’s still focused but it’s not like I don’t have to be fully locked in I could kind of be doing other stuff and you know. Joe: I got you. Hey, you mentioned the word meditation I want to jump right in to that if you don’t mind. Just are you up and meditating every day? Did you read a number of books? You’ve been doing it for a lifetime; I would imagine based upon the way you grew up. Ezra: Yeah I mean you know this hippie commune that I grew up on was not what you think of. It wasn’t like crunchy granola, everyone meditated and you know we didn’t have animals. It’s very different than what you think. It wasn’t one of these places where you had to subscribe to some ideology to be a part of it. A lot of these intentional communities in order to get in them you have to be a … you have to hold a certain set of viewpoints. I describe the difference between an intentional community and a cult in these ways because a lot of people are like oh you grew up in a cult like the group of … any time you get a group of people living somewhere with different viewpoints people call it a cult right? So let’s just let me give you my description for this, from my perspective a cult is something that is easy to join and hard to leave. An intentional community is something that is very hard to join and very easy to leave. It’s like hard to get in to the party and then if you want to go at any time you could get out of here. That’s sort of the difference between those two models. And particularly in the place I grew up it wasn’t like built around a hey you must believe these things to live here. It was like a bunch of hippies who sort of wanted to step away from traditional mainstream society and focus on how to live pleasurably in a group and do cool things like run charities. And yeah I mean there was definitely some alternative viewpoints and they definitely teach courses on things like communication and relationships and all kinds of stuff. It’s a really really cool place but meditation was not like a part of my life as a kid. I was just like … I went to normal, I went to high school normal school. I was a normal kid. I just went home to a different place than most people and I didn’t go home to the suburbs. So you know I kind of came across meditation through my wife. She was a yoga teacher when I met her. And she was all into this sort of Eastern philosophies and stuff. And we go through phases where we will be meditating 30 minutes in the morning and 30 minutes at night and then we won’t do it for a couple months. We kind of like … I think that people think that they’re failing if they don’t stick to their routines. And it’s like routines are meant to be broken. Part of the fun of having a routine is breaking it and coming back to it. It’s like the goal is not to just do the same thing all the time. You notice if you work out and you do the same work out over and over your body gets used to it. So we go through phases where we’ll do it a lot and we won’t do it that much. I do find that when we are doing it I feel better. I feel clear and I like it. And you know when we restart we’ll start with just like 10 minutes in the morning, and then maybe like 15 minutes, and then we’re like 20 minutes, and I actually found this really cool meditation seats on Amazon. They’re like a tiny little plank with a cushion on it and two short little legs and you kneel on them. And man they’ve been awesome because they keep you upright. But yeah I like meditation; I’m a fan of it. And I think that really it’s less about the specific formula that you subscribe to and more about the intention to take time for yourself and take care of yourself. Have a bath in the evening, pay attention to what you’re putting into your body, move your body. It’s like … it’s more about the intention of wellness rather than the particular formula that you are subscribing to for wellness has been my experience with it. Joe: Yeah. Ezra: Because … different strokes for different folks man. Different shit works for different people. Joe: Absolutely. We’re running a little short on time but I can talk to you for another hour and a half but I want to talk quickly about the helping that you do in terms of the Smart Marketer. Because the people out there listening they’ve heard you mention a few different things. I first met you at the Smart Marketer conference in Austin last year, I was just at Blue Ribbon with you in Denver which is your Mastermind group and then I think you’re going to Capitalism next week in Austin as well? Ezra: Brand Builders, are you coming? Joe: Brand Builders, yes we’ll be there as well. Ezra: Hey, maybe we could actually talk to each other in person. Joe: I know, how about that? That’d be awesome wouldn’t it? But you know with Smart Marketer Mark actually bought your Facebook program but you know I’m constantly talking to people about what they’re doing within their e-commerce businesses and where to go what resources to look at. Can you just talk briefly in terms of what you do and what programs you have in there and what resources are available for those people that are listening that are e-commerce folks that want to grow their businesses but at the same time do it in a shorter day like yours is. Ezra: For sure let me introduce to you the concept of permaculture. Are you familiar with that concept? Permaculture, it’s a farming term. Joe: No. Ezra: What it means generally … what kind of the high level meaning is to reuse all of your resources to their greatest benefit; so capture the rain water, water the garden, take the chicken shit use it for your compost. Reuse of resources. So I spend all of my time with my focus on innovation in the direction of e-commerce and I do a really good job at it. And then with Smart Marketer I document whatever is working and I share that with my community of business owners through my free blog and through educational courses where I have how we run Facebook ads or how we do conversion optimization on our website or how we run project management for our brand or how we run social media for our brand or whatever. I have all these different courses but what they are is they’re a direct documentation of what’s worked for me and my brands. I then take the money that I make from Smart Marketer and I reinvest back into the e-commerce businesses. And in my e-commerce businesses I’m also developing software. I’m developing things to make them function better. So anything that works really well I open source that and share it with my community of business owners in the form of software as a service. Any money that software as a service brand makes I dump back in to e-commerce. So all of these things sort of work together. The e-commerce is the heart that pumps the blood to the information which then takes revenue and puts it back into e-commerce which then lets me do developments which then I use for my software as a service brands so kind of all works together and Smart Marketer, in particular, is do and then document. And I only have two products, I have digitally delivered courses … digitally delivered educational courses in the forms of videos, PDF’s, and handwritten notes on what they are that teach you the things that I have found to be most effective. Paid amplification, how to run Google traffic and Facebook traffic to your website, project management, how to run your e-commerce business with systems and processes at scale and hire people, social media, how to have ongoing content and engagement for people who bought from you in the past. I have all these different courses and they’re on my website but I have digitally delivered educational courses and I have a Mastermind. A Mastermind is only for million dollars sellers basically. If you’re doing 500 grand minimum most people are doing five million, 10 million, etcetera … then this group is for the high achievers; the people who have really made it. It’s a more intimate intense program where it’s like very high level 100 people all really kicking butt. So I have that Mastermind and I have the digitally delivered courses. And that’s all Smart Marketer is. It’s just my personal journey being documented and open sourced for business owners and thankfully for me, I think again timing was a big issue … a big thing here. I was the first you know. I was the kind of first e-commerce influencer and as much as I started a blog about my e-commerce journey before people were doing it really really and it got real popular early on. And I’ve kind of continued to put energy towards it because I love doing it and I feel really fortunate that people care about what I have to say. It was like really awesome that people want to hear this stuff because for me it’s like you have to be a total nerd to be interested in this. It’s like kind of dry content, it’s not like … it’s not dry but it’s like if you’re not into internet businesses you’re not going to be interested in this blog. I mean yeah I talk about relationships and lifestyle and stuff like that too and that’s fun but I think that like the real sort of core to base of subscribers are internet business owners and e-commerce business owners, and so that’s that model. Joe: That’s fantastic. I’m always impressed when you speak. I’m always impressed with your energy, your enthusiasm, and the fact you’d really really trying to help people more than anything else. And it comes back to you. It’s not like you’re doing it for free and whatnot. Then you’re not trying to earn a living for you and your family and whatnot. Obviously, you are but you do it in a manner that is beneficial to others that comes back to you which I commend you for. Ezra: Serve the world unselfishly and profit; that’s my motto in business. Joe: And you came on here not even knowing fully what we were going to talk about. It wasn’t a pitched Smart Marketer or any of your services. Really it was to talk about work life balance which you laid out very very well. I loved your journey. I love your approach. I love your philosophy. And I’m really hoping that people go back and listen to this again and actually read the article that will be produced from it as well so that can really hone in on what you do and focus on it to, maybe get out to see you at some of these events that you put on and get to Smart Marketer and get better at what they do. Ezra: Thanks man, and I would totally share this. Let me know when it comes out I’ll put it out. Joe: Absolutely. Thank you for that. We’ll put it down and I’ll put all the details on how to reach you and how to reach your courses and whatnot down on the show notes. And I will reach you when we get it wrapped up and ready for the world. Listen to it and watch it and thanks for your time, Ezra. I appreciate it. Ezra: Thanks man, talk to you later. Links: Smartmarketer.com Free Facebook Video Ad Training Full Course Selection Blue Ribbon Mastermind Ezra on Twitter Ezra on LinkedIn

If you want to know the value of your business and where it comes from, do the work. Take the time to collect the data, then hone in on what is the right fit for your company. Prioritize figuring out what makes your business tick in order to grow a sustainable brand. The bulk of Babak Azad’s body of work lies in growing the Beach Body brand from 100 million to over 1 billion in revenue in eight years. Now working as a consultant in marketing for multimillion dollar businesses, Babak and his team focus on customer acquisition, retention, and the power of customer experience. Babak is here today to talk to us about building a lasting brand by helping business find a few channels that work well and hitting those home. Episode Highlights: Babak shares his unique way of looking at customer acquisition in every type of business he touches. Why business metrics are not as difficult as people think if they start with the basics. Start somewhere and then refine over time. The importance of knowing what a good customer is worth in any business. The things business owners should be tracking at a minimum. Look at the levels and the patterns. Get things right for a few to start off before rushing around trying to scale up too quickly. It is crucial to your success as a marketer to seek out and hone in on the best channels for your business. What your strategy should look like once those channels have been targeted effectively. Use service marketplaces such as Fiverr and Upwork to find small ways to find qualified staff to collect crucial data. How Babak helps clients discover the right intersection of branding and direct marketing then infuses that with customer sustainability. Why it is so important to start taking care of the customer. Hear Babak’s 4 pillars of brand building. Transcription: Joe: So Mark I know that amongst all the Quiet Light Brokerage, Jason is probably the fittest. But I occasionally do get my butt kicked by someone online with beachbody.com. Most recently a young lady … I can’t remember her name but I keep going back to it. I love the program and I love the story behind Beachbody’s success. Because as you know I’m an old radio spot ad, radio infomercial, TV infomercial guy and that is where Beachbody started; I believe. And you had them on the podcast is that right? Mark: I did. Yeah, I think pretty much everybody has heard of Beachbody at some point or another. I mean it’s a huge brand; huge name. I was able to talk to Babak Azad. He was the Senior Vice President for Media and Acquisitions; really fancy title, big companies … that comes with the big companies are fancy titles but his role at beach body was to figure out their customer acquisition strip. And this is what he does now. He’s no longer with Beachbody. He did leave a little while ago. He’s now with Round Two Ventures and they help e-commerce companies eight figure or nine figure, primarily e-commerce companies hone in on their customer acquisition strategies. What was great about this discussion is seeing as at scale, seeing what a … somebody who’s in charge of a business that when he came into to Beachbody they were doing 100 million dollars in revenue annually. That’s a lot of money. Joe: It’s a lot. Mark: When he left in just a few years later they were doing over a billion dollars in annual revenue. Joe: Wow. How long was he there for? Mark: I don’t know. I would have to take a look to see but it wasn’t more than a few years. So he’s really responsible for the explosive growth. I mean again a lot of people have heard about Beachbody or remember hearing about them. Way back when I was in college which unfortunately is too long ago now, so I remember hearing about them then. Now I mean everybody knows Beachbody. Everybody knows the brand and that was because of his customer acquisition strategy. We talked a lot about what that was and we talked a lot about problems and mistakes he sees especially in seven figure e-commerce businesses and even eight figure e-commerce businesses as they’re trying to grow. I’ll leave some of the mystery for the actual episode here but a couple of things that I pulled away from this that I thought were really good; one, he said that if he comes across a company and they have more than four main acquisition channels that he’s guaranteeing they’re wasting money and that they are completely … not doing what they should. Some people get all worked up and you know they think oh I need to be on Pinterest, I need to be on Instagram, I need to be on Facebook, I need to be here or there and everywhere. And he said that’s not how it works. He said find a few channels. He says it should be no more than four. Ideally, it should probably be maybe three or even two to start. And do those well and just milk those for what they’re worth. Really hit those homes. That was one thing that I really pulled away and the other thing I pulled away was his emphasis on data collection. And I run into this problem since that I own all the time as I always want the data collection to be perfect. And then I get kind of lost in the weeds, right? You get all the state in front of you. You have your analytics. You have all this stuff coming in and you’re like what do I do with this? And his response was what I’ve heard from so many other successful entrepreneurs, just start doing something with it. You know he said go out and hire a college kid, go out on Upwork and have them put it into Excel and start analyzing the data. He said the data will start bubbling up from that by itself and start giving you insights and then that can direct you into what you should actually be collecting; a fascinating conversation from somebody who’s done some pretty big time stuff. Joe: Yeah. It sounds like the data will speak to eventually. And even though when he left it’s a billion dollar company I think that the lessons that he’s learned along the way are incredibly valuable for those doing six and seven figures in revenue. You know a few weeks ago we had Ryan Daniel Moran on the podcast and he said: “find your customers”. Find your customers and then send them to the least half of resistance to ordering. So it’s going to be interesting to see how those two things jive with … back in what he said here in the podcast. Let’s get to it. Mark: Absolutely, let’s go. Mark: Babak Azad thank you for joining me. Babak: Thanks a lot Mark, glad to be here. Mark: Did I butcher your name? Babak: You did not. You did it well the first time. Thank you. Mark: We literally just rehearsed this. We rehearsed it and then I hit record. I’m like I’m so going to screw this thing up. Cool, I … thank you so much for joining me. I know you and I talked about a year ago for a piece I wrote on entrepreneur.com and I’m super glad to have you on the podcast right now. We have a little bit of a tradition here at Quiet Light where we have our guests introduce themselves because hey you’re better at knowing what your background is than I am. So why don’t you go ahead and introduce yourself real quick? Babak: Sure. I live here in LA with my wife and two boys. I started out as a math major investment banking business school. I kind of came from that route. I started a magazine here in LA which failed miserably; best 25 grand I ever lost. I needed some humble pie, what I read that point of my life and then spent eight years in Beachbody. So the bulk of my professional experience was there; built analytics and then oversaw media and customer acquisition. So P90X, Insanity, 21 Day Fix, Shakeology, all that. Those efforts are for eight years and we kind of had a nice clean 10X. I already got there at 100 million so there’s already substantial scale; really I obviously helped to push that thing to over a billion when I left three years ago right when my second son was born. The simple version of it, I have to start something, the team fell apart really quickly and then I started working on building a consulting business. So that’s what I do right now; help generally seven and eight figure businesses, sometimes nine on … heavy on marketing, support around customer acquisition, retention, and analytics and really much more recently heavily infused with customer experience and really how to … I’m leading to writing a book about it too but really just the power of customer experience that’s very much consistent with performance marketing approach but also really layering in building a lasting brand. That’s really where my focus is today and I love what I’m doing. I have some great clients and yeah … so I’m having a good time with it. Mark: I love that you lead with the fact that you had a magazine startup that failed and then you just kind of glossed over the fact that you were part of the team that grew Beachbody from 100 million to a billion dollars. You know just a small footnote in your career history there. Babak: Yeah it’s a … you know I have a … I appreciate all the experiences. You never want to go through those negative ones. I think we all have gone through them and just … I had to say I’m not sure I’m as humble as I need to be at times but [inaudible 00:07:25.5] as I mentioned it was an important thing of learning what it’s like. I’ve been really much more of an analyst at that point. And then yeah I mean Beachbody was awesome. I had a great experience and … but it was time for me to go. You know eight years was a long time there and I grew a lot. I met my wife through one of my best friends there and [inaudible 00:07:41.6] me up for kind of this next chapter that I’m in right now. Mark: Cool we’re going to be talking today about customer acquisition and also building a brand and some of the lessons that you pulled away from Beachbody and are now doing at Round Two Ventures is that right you’re doing this at Round Two? Babak: Correct. Mark: Okay. I will link to Round Two Ventures and then your personal blog in our show notes and anything else that you want us to link to in the show notes. But … so we’re going to talking a little bit about customer acquisition, lifetime value, and this intersection of branding. You have kind of this unique way of looking at this customer acquisition strategy, maybe we could just kind of start with kind of a general look at your philosophy when it comes to customer acquisition in the e-commerce but also in the SaaS world. You know I think metrics, being really metric heavy on customer acquisition and lifetime values, this is really kind of a SaaS world sort of conversation but you take it towards e-commerce and towards every other type of business as well. Babak: Yeah it’s funny because I started really with physical products and given that distinction which I mean physical products, we sold DVDs and multi-vitamins at Beachbody. And that’s really where a lot of my real marketing and just … I would say professional experience came from. And so this distinction of physical versus info versus SaaS really was nothing I ever really considered until I started frankly getting out of that world and talking to other folks. You know when I was at Beachbody and then started to learn about this but yeah I mean … so first off I was a math major but you know I wrote a piece a bunch of years ago saying business metrics are not college math, [inaudible 00:09:12.7] barely high school math. And I think that’s the first thing is … I think I know a lot of people who are intimidated by the metrics or surely daunted by how do you do it or their systems. And you know I’m a firm believer first just to start with something. I think Peter Drucker you know said what you don’t measure doesn’t get better and so with the opposite is very much the case. That what you do measure, what you report on, what you send in an email or whenever it’s your phone because it’s fun to mine you just start to pay attention. So there’s always a bit of grounding of just the basics in fundamentals. And that’s really I think my approach. I’m not a shiny bright object guy. I believe that if you get the basics and fundamentals then much of what you need to do starts to take care of them itself. But really when it comes to customer lifetime … I mean I look at e-com and frankly all of the businesses, you know fundamental is I grew up as a paid media guy in marketing. And I think it’s evolving over time but you know from a Beachbody and beyond heavy on TV, heavy on digital, you know that was what I knew. And certainly one of the core 10X. If you’re going to run paid is you’ve got to know what a customer is worth. You know people sometimes ask like what’s a good CPA? It’s like I don’t answer that question because I don’t know your business. I don’t know what a customer is worth. You know are you … do you have business constraints around needing to be casual positive on day one, on day 30, ideal business goals. There’s so many factors that come in so this but really my belief is … and I just don’t know any other way is especially when you’re running paid media you need to know what a customer is worth because you need to know how much you can afford to pay for them. That sounds really basic and fundamental and hopefully for a lot of folks that is. But you know that’s the core of it because ultimately it’s how do you know if you’re going to spend more or less? How do you know if your numbers whether in Facebook or otherwise are good or not? You have to have some of that measure. So a lot of the core work that I do with folks … and really I’d write about and all that is really if you’re going to be running paid you need to understand those basics around customer acquisition. And then again start with whatever you have even if it’s all customers that’s … you’re not dissecting by ad said or by Facebook versus Google. Just start somewhere and then you start to refine this overtime. Mark: All right. I love these conversations because I go into them sometimes not knowing what I’m going to ask and then after the first two or three minutes I’ve got a list of questions. So let’s start with basics, you said start with the basics and fundamentals. What are those? What should somebody be tracking at a minimum? Babak: So let’s assume [inaudible 00:11:39.2] whether you’re a SaaS business, info product, physical product you know certainly from a from a traffic side the core stuff of spend, click through rates, CPC’s, [inaudible 00:11:50.5], cost per click, conversions, cost per acquisition … whatever that means for you; for some folks, that’s if your lead gen versus you’re loop driving to an order. Those are just conventions and so the philosophical stuff and the strategic stuff applies to both. Certainly, you want funnel metrics, how many people hit your site whether it’s landers or blog pages … you know get through the funnel and so whether you have one step or a five step process I would say again start with … if you have GA set up or you have others tools set up, what kind of just basic tracking of how many people are hitting pages, what’s your conversion rate, average order value, and then ideally over time … and whether it’s someone converts on day zero or beyond, what is the value of those people over time. So I generally try to look in ice sized chunks of day one … day zero, day one to 30, 31 to 60, and then beyond. And depending on your risk profile, your business goals, all those things you may determine how long you want to look out and how much you want to apply towards customer acquisition. Mark: Let’s talk about that a little bit here because this is something that I’ve run across a few times recently. You know looking out over these different strata of periods of time; zero to 28 and then this kind of second up to maybe around 60 days; why are you taking a look at that? And you’re taking a look at this in terms of the value that client is going to bring to you right? Babak: Right. Mark: So why break it out into those different groups? Babak: Well first and foremost depending on the business goals and constraints, that can oftentimes going to define how you’re going to approach managing. Let’s say … I mean I’m going to talk about paid media for a moment, that’s going to manage that because if you look at … if you need to be breakeven based on credit terms, cash flow, whatever that is; if you need to be breakeven by day 30 or day 60 then you need to know what that customer is worth. And so based on a margin basis not just certainly on a revenue basis but on a margin basis you need to know how much you’re making by day 30, by day 60 cumulative and that’s going to help to define what your CPA targets are. And then it’s … again for me, there is no right and wrong whether you’re managing to a breakeven, to a margin percent, and if you are just revenue driven and you’ve got venture funding and you need to be driving those are not for me to say. And I never have a perspective of right and wrong … it’s those are personal and business decisions but you need to understand that. And then frankly once you have some of these base lines then it’s a matter of how do you start to improve those things over time. So if you know what day one, day 30, 31 to 60 then presumably someone in your team whether it’s the owner, the single person, or someone on the team is spending time testing to say how do we actually start to drive this and improve that. And again different models you may need to look at 180 days, you may look at a year … I mean I work with folks that have a one year break even because they can afford to do that; some folks breakeven on day one. And so different businesses and different models can allow for that and some it’s much more difficult. So you just have to understand the nature of your business and then what kind of things you’re trying to constrain with. Mark: Yeah, by the way, some example … so something that I’ve run into in a business recently where we had a solid lifetime value number, and we were able to calculate it pretty well by taking a look at customers that had … this was a subscription based business, we took a look at customers that have canceled over the last six months and looked at their average lifetime value. And you know the number was something like I don’t know $130, $140 but the average ticket value for any single sale was maybe about $30-35. What we found was that there was these whales and there right? These whales in there that were spending $3,000 and it took them years to be able to get to that point. So when you take a look at that lifetime value analysis we say okay that they might be worth $140 or $130 whatever the number was but was in order to do that you need a couple of these whales to wait for three, four years before you can actually get that value back. Babak: Right. Mark: So we had to kind of take a look at that from that kind of strategic way [inaudible 00:15:50.3] okay actually what are we getting from clients on average in month one and then in month two and then a month three and beyond that. We’re not going to care too much about the lifetime value because it’s going to take too long to recoup that cost. Babak: Right. Yeah and some businesses may not be able to afford to wait that long for those whales to kick in. And really then it means A. you’re managing your risk in a certain way. Again, whatever is appropriate and then you’re basically operating at a higher margin than maybe you could operate if you could tolerate that and maybe you want to take some of that and spend it into media. But if you can’t wait that long and there’s just too much risk and it’s too small of a percent and too inconsistent then that may just be the way you run it. I think I get in some ways the same question when you’re first starting, it’s … that’s great if you have five years of data and you have a much more sophisticated and robust [inaudible 00:16:37.1] data in your business. But if when you’re just starting you probably need to start more conservative right? An owner that has bootstrapped the business knows that you start with what you can afford and then as you learn, as you develop and have this history… the history in the business then you start to understand your customers better; what they’re worth and then maybe you can start to manage your media and how you think about that better and surely hopefully concurrently you’re optimizing the funnel so your customers are worth more, you’re converting better, all these types of things right? But that’s just the nature of again where businesses are in there maturity and how long they’ve been around. Mark: Yeah one of the common objections I hear from people … because we ask people who are selling their business all the time what’s the average lifetime value of a client? And one of the biggest objections I get to that is I have no idea because customers are still with me. And you said something at the beginning and that is just start. There’s a lot of models out there, just start with something. Do you have a basic model that you like to follow? I know for myself I just like to take a look at okay I might sell if a customer is with us and from the Quiet Light perspective we can say the same thing. Our business is typically one off but we have people who have sold two, three, four businesses. All the same, we don’t want to assume that, we’re just going to take a look at what … the lifetime value I spend right now with the assumption it could grow. Do you have a recommended model for people that are saying I don’t know how to [inaudible 00:17:58.7] for these people that are still with us? Babak: So the fact that a customer is still with you for me is not a reason to not understand what a customer is worth. And so let’s say they’ve been with you for … let’s say the businesses have been around for a year and you’ve got 20%, 50% of the customers have been around that long. Do the average based on how ever long that cohort has been around. And if the other ones are … you know seem like they’re directionally going that way then great. And then as you get more information you can start to build your model and add to it. But you know I think part of the thing also to be careful over depending on how long the business has been around is how many people are you looking at? So if you’ve got 100 customers versus 10,000 you trust more volume, right? And then the other part is just looking at I like to break things down into monthly cohorts. Let’s assume it’s just purchase, so I’m not lead gen but it’s purchase, I like to look at who are all the people who first transacted in January, and then in February, and then in March and look at their relative month one, month two, month three revenues and certainly again margin and then start to see what kinds of patterns start to form and then again. And starting really that at that level and then you just start to refine this thing and as you get more data and … then great then you start to layer in. So worst case you’re being conservative because you have customers who are going to stick around a little longer but that’s a good thing and that’s a good worst case to have as opposed to certainly the opposite where you may be overestimating or you may be overlooking at one group that’s worth a ton and everyone else isn’t remotely tracking towards that super high value group. Mark: I think a problem that people run into a lot is they’ve up the perfect be the enemy they good, they want to get that perfect model and if they think they can get it then they don’t do it. I know I’ve fallen victim to that quite a bit as well. I want to [inaudible 00:19:41.4] Babak: Quote I have on my phone that shows up is perfect … done is better than perfect. And it’s really easy to get stuck in that analysis paralysis perfection like … and also frankly this idea that everyone else has it better. I think a lot of people think that bigger companies or those using better tools always have better data but is definitely not the case. Like a lot of times the bigger companies they have too many legacy systems so I think oftentimes that comparison can pull people back because they think I’m never going to be able to achieve what someone else is doing or all that big data stuff. I mean just start with what you got and literally it could be Excel with a college kid and then you start building from there. Like literally it can be that that can be very very effective and I’ve seen it be that way. Mark: Yeah that’s a good lead into my next question because you know you started at Beachbody with 100 million in revenue right? So you guys wanted to go ahead and start digesting data, you put a million dollars towards hiring on a new team just to be able to digest data. The entrepreneur who has an e-commerce business doing three million, four million bucks that’s a lot more of a challenge for them to bring on that much of a team. Excel, analytics, are there any other programs they may want to look at or systems that you know of that might be a good starting point or would you even recommend going out and hiring a college kid or going onto a place like Upwork to be able to have somebody to crunch numbers? Babak: Yeah I mean so first of all when I joined again it was seven, what you think maybe a hundred million dollar business has in terms of systems and processes I would say first of all the tools today are so so much better. But I looking back, I work with some hundred million dollar businesses now that have dramatically better systems and reporting frankly because the tools are just much easier. So you know it took a year or so for me to get correlatively cleaner data and not even clean. So first of all even back then it wasn’t like everything was so dialed in, that’s kind of part of my point. And then second again like depending on people whether on Shopify or Magento or whatever your platform, honestly the basic thing is do a data dump. I’ve hired for multiple clients someone part time on Upwork to basically do some slicing and dicing; basic stuff, get some things in place. And we’re not talking … so first of all even if you hire someone full time and let’s say that person is 50,000 a year just picking a number, your exposure to that person is not 50,000 because within 90 days you should know whether that person is going to be working out or not. So let’s say it’s a quarter of that plus maybe a little bit more so oftentimes first people think about if you’re going to bring on someone full time that that annualized cost that’s really not what it is. You should know I think within 90 days that you’re getting what you need and they’re on a path. But at the very least there are definitely folks on Upwork and really just looking for someone who’s got some similar work; I put people through an Excel test to make sure they can do the basics. It’s all made up information and yeah you start with that and I’ve literally had college kids help out just … who were good at Excel. They don’t need to know that much, they just need to know how to slice and dice some information. And maybe it’s an MBA, I’m not saying you have to go there but certainly Upwork, Excel, using again basic tools. You do not need certainly anything remotely close to enterprise so you get stuff going. And I will say I do, I run some numbers for some of my clients and it’s literally … I did one about a week ago, Excel, Hubspot, Shopify, GA piece it all together and we had a pretty rich view. It took some time obviously but we then had a pretty rich view of what those customers look like. Mark: So with somebody who has a Shopify store or an Amazon store where you can’t really track customers as well with Amazon, but let’s say Shopify store where you can track your customers, or a SaaS application or anything else where you’re tracking those customers would you literally just go out and do a dump of that data of the customers and go back and start to calculate okay this is what … you know graphing it out, these customers are worth this much in those first 30 days and then it starts to look like this when we move out? Babak: Yup that’s exactly. I mean … so and that’s what we did. Let’s say you’re looking at 2017 data it’s literally [inaudible 00:23:52.4] all the new customers and that’s part of the thing is making sure they’re new versus repeat. But let’s just say you can identify that hopefully relatively easily; who are the new customers who purchased for the first time in January of ’17, February of ’17, March of ’17 and literally track those people. Look at their February orders for January, look at the March orders for both like you know January and February and really that’s literally started that way. And you can then start to slice and dice by traffic source, by product, by offer, by ad set. But that’s next level, for some folks they just want to get the pure basics. Just start with that average thing and then once you have that and then you start to refine over time. But literally it’s a data dump and you know if you can marry it with GA or with your CRM or ESP then great but at the very least start with the overall, start with maybe one line and then you just start to get better from that point. And frankly again that’s what I did with Beachbody, that’s what I do with my clients. And whether it’s me or working with their teams you just start and then you start to refine over time. Mark: All right so let’s go to the other side of this conversation. We started to get a good sense for our lifetime value and what a client brings to us in terms of different time frames; the first 30 days, the next … the first 60 days and so on and so forth and we know our cash flow requirements. Again, people listening, you have to keep in mind if you’re going to spend $50 on a client and they’re not going to pay you $50 until month six you need enough cash flow to be able to get to that payback period. Let’s build a strategy, what does the strategy look like then at that point from acquiring the customers and going through different channels? I know obviously with Beachbody you guys did television, you did radio, you did a lot of media which was hard to track. And we see this a lot with … you know online platforms are really good right now at tracking with view through conversions and everything else but there’s still some of those mediums out there that aren’t great and imperfect. How does that sort of factor into your decisions when it comes to acquisition channels? Babak: Yeah I mean so no matter what channel you’re in attribution is the bane of everyone’s existence. A very very few people have it down and like oh I know what that means to have it down. You want to get to the point where you feel like a level of comfort and confidence. You know these days again most of the work … I have one client that I work with on TV and it’s a very rare exception of how good their attribution model is but let’s say that for the most part, most people are doing … I mean it’s digital heavy. So for me, I basically focus and work with folks on really only a few channels so Google … which for me is Google and Bing. I mean people always forget about Bing, it’s another 5, 10% and my joke is if you don’t want that 5, 10% can I have it? And I’m joking but no one ever says yes. But it’s using higher ROI’s especially when you’re talking slightly older demos. But Google and Bing, Facebook and Instagram, your internal e-mail and affiliates, and frankly just … and I said just but if you focus there I’ve seen plenty of businesses go well into nine figures; focus there. And then certainly you can layer on radio and podcast, TV, direct mail; but honestly Google, Facebook, affiliates, e-mail and internal … you know that’s really where I put a lot of time and attention. And I’ll say even then attribution is a bit of a mess because Facebook and Google don’t talk to each other. So they’re each one who takes some credit … you know or using GA last click, what’s happening are people opting in through Facebook and then converting through e-mail? But you really just have to start to piece together things, at the end of the day again depending on your business model your PNL and bank account are the true measures of it. And so that sounds like a totally average overall view but yeah that’s again I work with folks that have that and then they’ve got to a certain level of sophistication. So you start with … you know start and piece together what does Google say, what does Facebook say, like if you add up those two do you even have that many orders? You’re going to have to be very careful about double counting but you just start to piece together this … the data starts to tell a bit of a story. I would just say one thing you mentioned view through, I am a very very very conservative on view through so the point of it I basically I ignore it; certainly from a GDN side and really even from Facebook. I just think unless you prove it I’d rather start with a [inaudible 00:28:07.2] and it doesn’t work. I mean you got to prove it as opposed to just proving it. But I know that you know 28 day click one day view on Facebook is the standard set up. I moved most people to 7 day click not because it’s right but mostly because it … we got to account for double counting, AdWords, what’s going on in email, things like that. So there’s … again there’s no right and wrong but that’s one of places I’ve kind of dialed in a little bit is looking at 7 day click. But honestly my biggest … the biggest mistake I oftentimes see with people with channels is they have too many. And so I think if people say oh I heard someone’s doing something on Pinterest or YouTube or I got to do this, frankly if I see people who have four channels where it’s 25% in each, that says actually something is not being done well enough. And usually, it’s people who are really scaled, I kind of have this thing of two offers two channels, most businesses that have scaled substantively they’ve gone deep and hard in a couple channels which basically means they’re left probably some money on the table elsewhere maybe but it means they’re focused. And that means they’re exploiting where things are working. And so I think that’s one of the things, people think I got to be in so many places, I don’t … I have not found that to be the case at all. And even though it sounds like you’re concentrating your risk it also means you’re exploiting an opportunity. And that’s really I think oftentimes what you’re really trying to do. Mark: How do you know when to give up on the channel if it’s not working or would you? Babak: You know it’s a good question I think at some point you have to make a call so it’s … I don’t have a rule around it and I put it that way hard and fast. I think it’s … first of all, I like modeling off of other people; not copying but modeling. And so it is … it can be dangerous because you can see all these other people seemingly running a bunch of ads and yours may not be working but you may not know what their goals are and their goals may be different than yours. So I think it’s always … you got to be careful about comparison but you know I think at some point you have to take … just like a lot of things you have to take an honest assessment and say do we feel like we’ve given this a fair shot? How much time and money have we invested? Frankly, what is it pulling because we all have tradeoffs whether you’re a six figure business or a nine figure business everyone is resource constrained in their own relative way. So you have to pick and choose your battles and really where you think now. I guess … and sometimes the market maybe telling you something too that it may not be the channel but maybe the way you’re executing on it right? Which may be kind of the same thing for you but I think that’s one of the things too is really you have to take an honest assessment of what have you done, what have you tried, have you talked to people, have you pulled in whether experts or friends or done some research and you know. I think then it’s relative to other things that you have in front of you, where is your time, your capital, your resources is better allocated. Mark: Yeah all right that’s awesome. I told you before we started recording this that we were not going to get to the one thing I really wanted to talk to so I’m going to get to it now. And that is something I find fascinating about your approach to direct response marketing because direct response marketing we often think about in terms of the money that goes in we want to make sure that we’re getting a positive ROI out of that and we’re just measuring that and that alone. And we see it almost as this opposite of brand marketing which is splash it out there splash it out there and splash it out there and it’s kind of a long play. But you have this intersection and you do this a lot with Beachbody as well, you have this intersection of brand and also the direct response. If somebody is focusing on those four that you put out, the Facebook, the Google, affiliate, and internal e-mail, what can they do to start building a brand and why is that important? Babak: So I think the first distinction is around something you said and I think a lot of people will latch onto which is brand marketing. And so really what I focus on and try to talk to folks about is building a brand. And so for me the distinction is brand marketing oftentimes is associated with you spend a bunch of money on media marketing whatever that’s basically non-trackable and that is trying to build brand awareness but without necessarily tying it to some kind of metric. And I say that as opposed to focusing on building a brand. For me, that really comes down to the customer experience. And so those are totally can be integrated with a performance marketing direct response model. And really that’s about how do you start to take care of the customer and treat them frankly like you would want to be treated if you were the customer. So I think it’s less about brand marketing initiatives and it’s more about this idea of does the word in the Lexicon around building a brand, about building something that’s lasting; how often does that come up in the organization? I had breakfast actually with a friend this morning and we’re talking about the idea of what’s on brand versus off and what that means. But really at the end of the day, it’s are you building something that’s got some sense of sustainability? And I think oftentimes especially when you’re earlier on the idea of shortcuts of doing things that are maybe … whether it’s not as clean or not as brand building, I get that everyone’s got to make their call all around those things but ultimately if you want to build something that’s got some sense of scale and got some sense of sustainability I do believe you have to be focused on building a brand. Because when you do that you start to treat the customer better. You start to invest more in your product. You start to invest more in the kinds of media and frankly, that kind of stuff can be infused in your acquisition efforts. Did I mention that I’m writing a book on customer experience and that really came from how do you start to bring DR and brand together and really things like tapping into a sense of identity in community. That’s not just brand marketing that’s non-trackable, you can start to build that into your video ads on Facebook, Dollar Beard Club … now The Beard Club and they’ve done a phenomenal job of there’s this sense of identity in association with you’re a man with a beard. And so they tap into that and who you are, what that means, and so that is one layer of customer experience and building that brand that is clearly tied to performance marketing but it starts to infuse that. I would say two things like … you know so my four categories is really around the human and emotional stuff; there’s product, there’s the transactional experience, and then there’s content like video. And they’re not mutually exclusive [inaudible 00:34:16.0] stretch. But I’ll say like with subscription businesses whether online … I mean media, SaaS, or physical box, one of the best places or best examples I see people have make some mistakes is around order notification. So this is not brand marketing, this is are you treating the customer better? Are you letting them know that next order is going to ship, that next feeling is going to happen? And oftentimes I see people say well if I send an email before that billing my churn rate is going to go up and my response is absolutely you’re correct but also you know what happens is your customer is actually aware of that billing. They’re not annoyed. I mean I think we all faced that thing where whether it’s a meal subscription or otherwise, a billing happened and we didn’t know about it we’re annoyed we got to go cancel. We tell our friends, we post. That kind of stuff actually has an impact on the brand. And honestly one of the best examples I’ve seen of how to use that notification positively is Dollar Shave Club, they send a notification but they use that as a promotional opportunity to say your order is about the ship do you want to add something to it? And so whether it’s their shaving cream or any of their other products they use that … and again 20 or 30% of people are going to open your email if you’re lucky. So it’s not everyone but you get the brand benefit of notification but then use that as a promotional opportunity and say do you want to add something more. And I would much rather be playing in that kind of world rather than trying to sneak in what you think is a one or two more orders but it’s very hard to quantify. But you absolutely are hurting the brand if you’re playing a longer game when you’re trying to sneak stuff in and not be as clean and upfront. And yes Netflix and Direct TV don’t do that but again those are very very different businesses than subscription boxes or something that you start on a risk free trial that frankly doesn’t get the kind of use that Direct TV and Netflix would. Mark: Could you repeat those four categories again? Those are great. Babak: So the first one is really I talk about as like the human and emotional aspects. So that’s things like identity, community, exclusivity, things that are raw human needs and traits. The second is really product, and there are multiple layers on it but I think it’s kind of crazy that I have to focus and emphasize it but the number of people that I see that don’t have the attention to detail on product. I’ve talked to people who’s starting they want to private label fine but the better your product [inaudible 00:36:35.0] part it doesn’t always win but a better product gives you a better chance at that. Third is the transactional experience, so how do you take people through your funnel, what is it like to get a refund, what it’s like to get … I talked to customer service those kinds of things. And the fourth is content, so how do you use video, music, spokesperson, or a character. I mean really each of these things, there are plenty of examples of companies that are using all of them or just one of them to really start to enhance that experience and really start to rile their customers. That’s the [inaudible 00:37:05.3] kind of thing but you basically need customers these days to be blown away. It is … you know I like to say it like it’s … when people say it’s the easiest time to start a business because generally the tools are easier but it’s also like that means it’s brutally difficult to compete and to differentiate. So you’ve got to be just a ton better than everyone else. And my experience is that customer experience and these kinds of things is really what you need and again it’s infusing this idea of playing the longer game into performance marketing and direct response. These two are not at odds. Mark: Cool. All right you got a book that you’re writing right now do you have any idea when that’s going to be done? Babak: Best case is Thanksgiving time but I’ve started … I mean I’m happy to post a couple of links to some of the things I’ve started to write about whether in LinkedIn or in Twitter to just to kind of go a little bit deeper into these and show some specific examples. But yeah we’re still talking a few months out. Mark: Okay I know we’ve had a couple of other people that are reading books and we always get e-mails after saying “Hey can I get notified when that book is out?” So do us a favor one when you do have that out send me a message and I’ll make sure I update everyone that wants to be updated on that. And then where can people learn more about you? Obviously Round Two Ventures, any other place? Babak: Yeah I mean my business is Round Two, it’s Round Two Partners. Visit the website. But yeah the same thing and it’s like a holding company but my blog is the easiest. It’s just my name, it’s Babak Azad B-A-B-A-K-A-Z-A-D.com And that’s what … I put a lot of content there and then frankly there and LinkedIn. I’m @BabakAzad pretty much on everything other than Gmail of all things but … another Babak Azad stole that from me but … he was earlier but yeah I’m on pretty much every platform. But my blog and LinkedIn are the two easiest platform. Mark: Fantastic, this is great. So thank you so much for coming on, I really do appreciate it. Babak: Thanks a lot Mark I’m glad to be here.   Links and Resources: Round Two Partners Babak’s Blog LinkedIn

Lianna Patch is funny. Not everyone can stand up in front of 150 entrepreneurs and make them laugh, respect her, and want to hire her all at the same time. Yet – that’s exactly what she did when I attended the Blue Ribbon Mastermind event in Denver last month (August 2018). When Lianna shares her passion, which is writing copy infused with humor that converts, people make more money. How? Their customers stay on page, get engaged in, and actually read what you write. Oh, and then they buy your product, write reviews and spread the word about your brand. Humor makes people like you. So why not write copy infused with humor? Because you are not funny. Me neither, at least that’s what my kids tell me (what do they know…). It is a skill we don’t all have, clearly. Episode Highlights: What Lianna does to help clients who come to her with the need for something new. How her techniques to boost add-to-cart conversions as well as purchase conversions. Why it is important to message-match across the board, through the entire purchase and follow-up process. The importance of building the relationship so that if the product is a one-off perhaps that client will be swayed to purchase other items. Lianna shares the biggest mistakes people make when writing online copy. Steps business owners should take to improve copy and what should be first on the list. What makes certain checkouts places that people want to revisit again and again. The importance of grammar and how intentionally not using perfect grammar can work if done the right way. Why Lianna thinks being buttoned up is a thing of e-commerce past. How to grab people’s attention with web copy content. Transcription: Mark: Joe you spent a lot of years in the direct response world specifically within the agency world and buying radio ads right? Joe: Yeah. Yes, I did brought a lot of copy. Mark: Brought a lot of copy and this is an area that we’re going to talk about today, writing copy. I find for myself when I have to actually write copy it’s a completely different mindset from pretty much everything else and it can be difficult to do. Lianna Patch and she is a professional copywriter for specifically conversions right? Joe: Yes Lianna Patch did a presentation at the Blue Ribbon Mastermind in front of 150 entrepreneurs and she writes copy that conversion … calls herself a conversion copywriter which I think is brilliant. I’m sure it’s a phrase that lots of people have heard but for some reason, it is brand new to me. Although that’s what I did, that’s what my contractors did back in my radio days and my online days. But what she did was she infused comedy into her presentation and she infuses comedy into her clients’ websites, their emails, their … all of their different campaigns and Mark it works. I’m telling you the presentation was fantastic she gave some examples of what the before and after copy was like and it just made me want to read it. When you go to her website it just makes you want to stay on the website and poke around and look at different things. And throughout the whole podcast, I keep going back to her website and giving examples that I think are just hilarious and make me want to keep reading. And I don’t think enough of us e-commerce entrepreneur or SaaS entrepreneurs whatever you want to call yourself infuse the human factor and a little bit of comedy into your content so that people realize you’re not just some big corporation that’s sending your standard email. It makes a big difference I think. Mark: Absolutely, any time you can get somebody to laugh that’s going to loosen them up and also to disarm them a little bit from that and accessible as well. That’s fantastic. You need to make sure you send me her website so I can take a look and enjoy some of the copy as well. Joe: Yeah there’s some great ideas there you can get right from her website. But this is important stuff, right? Our first line of engagement with our customer is content. There’s going to be some visual stuff but there’s usually some content as well. So anyone listening that has any online presence or hopes to buy one and do better than the previous owner I would strongly recommend they listen to this entire podcast. Mark: All right, well let’s get to it. Joe: Hey folks it’s Joe Valley at the Quiet Light Podcast. Thanks for joining us today. Today I have a very special guest, her name is Lianna Patch. Lianna, welcome. Lianna: Thank you so much for having me. Joe: You are apparently funny, you’re from Punchline Copy. I saw you … I know you’re funny because I saw you at the Blue Ribbon Mastermind. There’s no question about being apparently funny. Lianna: Okay. Joe: You said some pretty vulgar sayings in front of a big crowd of entrepreneurs and you could have fallen flat on your face or they all could have laughed out loud. And you did it within like the first 60 seconds and I- Lianna: I did. Joe: We all laughed out loud so thank you. Lianna: I’m so glad. Joe: It made us very comfortable being audacious ourselves so thank you for that. And I’ve looked at your website and I want you to tell folks about yourself but then I’m going to just like comment on a few things as well. So the for the folks listening instead of me doing that introduction, that fancy thing, why don’t you tell us who you are, what you do, and what you’re all about? Lianna: Sure. So I’m a conversion copyrighter which basically means I don’t just make stuff up I base my copy on customer research and what people need to actually hear. And on top of that, I use humor as a tool to help mostly e-commerce stores and bootstrap software businesses connect better with their customers and retain customers longer. Joe: Conversion copywriter, wow. Lianna: Yeah. Joe: I love that. Did you make that up? Lianna: I did not. Joe: Somebody else coined that phrase? Lianna: I believe we can attribute it to the great Joanna Wiebe. She is a fabulous copywriter. I’m pretty sure she came up with the term conversion copywriting. She’s the most well-known one. Joe: Okay. Lianna: And I met her in her first copywriter mastermind. Joe: And we will attribute it to Joanna Wiebe. But conversion copywriter really stands out and tells people exactly what you do. It’s pretty quick and pretty direct to the point. Lianna: Yeah. Joe: And you infuse it with humor so I just want for people that are not watching this video on the home page of your website … where is it, it says… oh, I’ve got to scroll down a little bit, where is it. All right there’s something that says something along the lines of … oh my God it’s gone I’m on the wrong page. Really. Anyway, it says something along the lines of blank blank blank AF and it’s right there in your face funny as AF. And for those that don’t have teenagers and don’t understand … I’m sorry for those that don’t understand what that means ask your teenager because they do. You have a knock knock joke on your website as well and it says “Knock knock who’s there and the answer is a shitload of money.” It’s all good. It’s all funny and it converts. So tell us about some of the experiences you’ve had with people that have terrible copy and how you fixed it and what kind of impact it has on their end mind revenue which is what folks are really looking for. Lianna: Yeah. My favorite type of client to work with is someone that comes to me and says okay we did the thing where we hired a professional copywriter and we come off like really cool and corporate and solid and we hate it and it’s not working and we need to be more personal and funny please help because they already know the value. They already know that humor is going to help them connect better. So one example that I have been talking about a lot lately because it’s exciting … and it’s an e-commerce brand that sells wedding rings, it’s called Manly Bands. And I came in and worked on some of their product descriptions. And they already have a super fun brand. They were already using humor throughout. I like to think of them as like the Dollar Shave Club of wedding rings but their product descriptions were very short. And they were kind of funny but they weren’t really converting. So I went in, wrote longer descriptions, which is funny for some people because they think oh short copy is better. People don’t like to read, people will read if you give them a reason to. And we made them funny and we made them personable and kind of weird and they boosted conversions almost across the board; both add to cart conversions and purchase conversions. So that was a really great test result to just be able to point to and say “hey look it works”. Joe: That’s great it’s a … you know I’m old school direct response, I used to sell stuff on radio. We’d write a 60 second spot ad that had to convert with someone actually calling the 800 number. I started in 1997 as I said before but you have to write copy that converts and get an action. So I love the conversion copy and it’s measurable. You also talked about not just on the website where people are looking at the product description, not necessarily in the cart things of that nature. But you really if you have a client and can touch every aspect of their branding campaign do you hone in on the and if yes what kind of things do you do? Lianna: I do try to so I work more on the … I work closer to the purchase and post purchase for attention. That’s kind of my jam. So I do a lot of emails. And I really feel like emails are one place we can use humor the most because it’s the ability to build that one on one connection. You can be so personal, you can be so weird and funny in email and people will … you know even if it’s coming from a brand they’ll be like I like this. It feels like a real person in my inbox. Of course, it’s top of funnel, sometimes you can scare people away with humor if you go about it the wrong way. It just depends on your brand and how willing you are to test those kinds of things. But if I can I’ll address all of those touch points because they should be cohesive. There’s got to be a message match between the ad, the landing page, the follow up emails, you know the eventual sale or whatever it is that you guide people to. Joe: I think the instinct of an entrepreneur that’s building a brand is to give the impression to the end customer. The first impression is to that hey we’re a real company, we’re doing things in a very professional manner; which kind of may be boring. I just had a business that won on a contract fairly quickly with multiple offers and his customer service emails and responses were “hey thanks for helping the little guy we’re here just taking care of my son join us and really … really appreciate it” that kind of thing. Lianna: Yeah. Joe: I think that does resonate. I think using the word feel, it feels like a real person behind the email. Lianna: Yeah. Joe: And really reaches out and helps them quite a bit. So you will touch all aspects of it from … if you can. From the website to … I mean from the email to conversion, would you do follow up emails after the sale as well and work out as well all aspects of it there? Lianna: Yeah. That’s actually one of my favorite things to work on. I was just talking to my friend Val Geisler, she’s an awesome email strategist about this and we were talking about especially with e-commerce businesses so many people are neglecting the long term post purchase follow up sequence. So someone has bought once and then they just get thrown back into this regular newsletter or sales email cycle. And there’s no like follow up and say like hey do you want this product that sort of corresponds to what you bought. You get the review ask emails every now and then or take a survey but there’s like two to three emails max after the purchase and then you just get lumped into existing customers. There’s no specific long term nurture track to get you back for that second purchase. So that seems like a huge opportunity for most e-commerce stores and for humor because again they’ve already bought from you once. Now is the time to build the relationship more. Joe: And it’s not just spamming them with emails if you’re writing good content that’s funny and enjoyable and they like reading them. They’re probably not going to unsubscribe. Lianna: Right. Joe: Perhaps. Lianna: Right and you can test your sending limits like if you start to see a higher rate of unsubscribes back off; that’s not rocket science. Joe: So I did a podcast early in the week with a guy named John Warrilow and he’s written several books and he has something called the Value Builder System. And it’s all about creating recurring and repeat revenue in your business and I would think that what you’re doing is helping build the relationship with the customer so that if they sell a one off product … you said earlier you know hey maybe you might be interested in this too, that follow up email sequence keeps them engaged and maybe perhaps will help them become a repeat customer and buy an additional product along the way. Lianna: Yeah. Joe: [inaudible 00:10:58.9] Lianna: Yes and even if it’s something that they might not need to of … I hear this a lot from mattress companies, I’ve worked with a few mattress companies you know A. they have other product lines. They have bedding and pillows and things like that accessories. But B. even if you move into a different business completely, if you’ve built those crazy rabid fans they’ll follow you to whatever you do next. Joe: So you’ve mentioned Man Rings was the first one or something like that. Lianna: Manly Bands. Joe: Manly Bands, I love it. Lianna: It’s great. Joe: And a mattress company, so I mean very very diverse product categories here. What other kind of physical product companies do you work with? So that people listening can say oh yeah okay she can help. Lianna: Oh yeah, clothing … I like to work with clothing. Honestly, any consumer product I think is really fun. I have to obviously believe that there’s a benefit to it. I’ve had people come to me. Especially in the supplement world, I’m a little skeptical sometimes of actual benefits. So I like to try the product first and say can I get behind this? And if I can then I’ll happily write a copy for it not that I can’t but I will. Joe: You know I wish we met …. what is it a decade ago now right? I sold my company in 2010 and boy you would had fun with that. I sold a colon cleansing product. Lianna: Oh great. Joe: We started selling colon cleansing on radio back in 2002 and a TV infomercial in 2003. It went 100% online in 2005 and ultimately built a digestive wellness center around it. Lianna: Okay. Joe: But boy you would have had some fun ones. Lianna: Is that like colon cleansing from the outside in or from the inside out? Joe: Well that’s from the inside out. Lianna: Okay. Joe: No it wasn’t [inaudible 00:12:39.2]. Lianna: That’s easier to sell. Yeah, okay. Joe: And it was … you know for those listening I mean you can’t … you think what’s fun about my product? You can’t … you have to be serious about it something like that. We try to be serious about it and I think it was okay. We got lots and lots of testimonials and people would actually love to be … strangest thing ever people, when we produced a TV infomercial we had a producer travel around the country following up people to give testimonials and they’ll actually get on camera and talk about their bowel movements and it’s just crazy. And you would have had a great deal of fun with it and we could have made more fun of it and made it more enjoyable for all I guess. But I mean you can … from what I’ve seen [inaudible 00:13:21.0] for your presentation you kind of make every little aspect of it fun so that the entire feeling of the company is joyful and fun. For instance, the 404 redirect that you put up on the screen at Blue Ribbon Mastermind, can you describe that for the people? Lianna: Yeah so that’s one of my favorite places where people aren’t expecting humor, to just give them a joke or something weird. And this is … what was it called? I think it was eventcenter.uk or something. The site’s not there anymore but it’s oh no you hit the wrong link this isn’t here choose one of our developers to fire. And it’s four guys and if you click one of them he puts his head down in his hands and the rest of them looks relieved and then it says oh no he’s only been working here for six months. He was just an intern like you’re so horrible. And then it redirects you back to the homepage. Joe: Keeps people on the site versus you hit a 404 redirect … oh my god, this guy is terrible and you leave. Lianna: There’s so many great ones, NPR has one too that’s oh there’s nothing here but here’s a bunch of other articles about missing things. And there’s an article about like lost luggage, Jimmy Hoffa … you know our retirement, things like that. [inaudible 00:14:28.0] for them like. Joe: That’s fantastic. What would you say from your experience and the clients that you’ve worked with, what would you say are some of the biggest mistakes that they make when writing copy? Lianna: One of the biggest mistakes no matter what industry you’re in is making the copy all about you. One of the easiest ways to fix that is to go through it and say how many times do we say we or I versus you the reader because they should always know what’s in it for them while they’re reading. Joe: Ok so back on the focus of the customer, what kind of things have you seen happen when people … if they want to take one, two, or three steps and try to improve their own copy? Is that step number one? What are the things should they do to try to make a big change and what areas should they focus on first? Is it the tagline on their website? Is it the email? Is it something in the cart? What do you focus on first? Lianna: I’d like to focus on whatever is closest to the actual purchase. So that’s going to have the biggest effect on revenue if you can improve your checkout, not just copy but UX. If you’re using something that’s not an out of the box thing like Shopify you might have some serious UX issues in your checkout that you don’t know about. What else- Joe: You’re infusing humor in the copy in the checkout? Lianna: If I can. Joe: If you can. Lianna: I was just talking about this this morning. It’s interesting how things connect. I think it’s Shopify doesn’t really let you change the form instructions or form auto-fill like the placeholder text in the checkout but that can be hugely persuasive. And it’s a great place to run tests because you can just change something like email address to your email address or your favorite email address and that can have a huge impact on conversions. And obviously changing copy on the buy button can have a big impact too. But all of those things come standard or you can’t tweak them unless you’re a custom coder. And I think even then it’s hard to get that stuff developed so I don’t know that’s been like a pet peeve of mine with certain checkouts. Joe: You want to be able to touch everything and change it and make it better. Lianna: Yeah because there are … I’ve been through some check outs that are just delightful and it makes you want to keep going even if it’s a multiple screen checkout. There’s a … do you know Cards Against Humanity? I’ve mentioned that at the talk. They have actually a fortune cookie company. Joe: Oh they do? Lianna: It’s called OK Cookie and the fortunes are horrific. I have one over there that says you will die at an Arby’s in Columbus, Ohio. That’s the kind of fortune you get from them. But their check out process is just written the same way that all their other copy is which is very informal. Like pop, your email address in here hit this button to whatever and it can be as simple as a verb change to make people think oh a real person touched this. This isn’t just a robot that’s going to take my money and maybe not send me these cookies that will make me sad. Joe: Again going back to how the end customer feels in the process. Love it. You talked about grammar and that it’s not always best practices to have proper grammar. I think … you know I was in the remedial English class in high school. I didn’t have Mrs. Henderson I had Mrs. Lane and she was a step down so my grammar is always kind of poor. We were at a friend’s house, I’ve got 14 and 16 year old boys and the neighbor was copied on an email because … it has something to do with the kids, the kids who are here and she asked my son if he’d already sent that. And he said yes, she goes oh there was a grammatical error and blah blah blah. And it’s still read very well, it felt good and it was like from a teenage boy. And you can tell it was from a teenage boy. And the intent was good and I never would have corrected it. And she tried to after the fact you intentionally will misspell things and misspeak or misspoke whatever the case might be from what I can hear and what I’ve seen is that correct? Lianna: Yeah. Joe: Can you talk about that? Lianna: Yes and if it’s a weird thing to say because I spent so long as first a copy editor and then a content editor. So I’ve been like in the nitty gritty line level proofing and the overall structural editing for so long and I was such a stickler for such a long time. And then eventually I had to let go because my heart rate was getting nuts. It just wasn’t … that was great for me physically. But I think it’s important to do it intentionally so that it doesn’t come across as an oversight. So for instance, if you’re going to put in a misspelling like I just said gonna, I didn’t say going to. Technically you know that’s an allusion it’s mashing two words together, cutting off the end of a word, that’s intentional. It comes across as intentional. Misspelling a word in a subject line can be intentional done the right way. The example that I gave was spelling M-O-R-E more as M-O-A-R because that’s kind of internet speak. That’s obviously intentional. Even when subject lines do go out with actual unintentional typos they tend to get higher open rates. I just saw one from Wistia they’re having an online conference called CouchCon. And there’s a subject line with “its” and there should have been an apostrophe in “its” and I marked that unread in my inbox for days because I was like I want to know if they did that on purpose. I don’t think they did. Joe: I don’t think- Lianna: They got a bunch of replies. Joe: I don’t think I would have known if it was proper or not but did I just hear you say that subject lines that have misspellings or grammatical errors actually have a higher open rate? Lianna: Sometimes I mean every … like if you’re talking to any conversion copywriter they’re going to be like it depends no matter what you ask them. So I have to just give that disclaimer right now; it depends. But I personally have seen it. Lower case subject lines often get a higher open rate because that’s the kind of email we receive from our friends and family. We don’t bother capitalizing subject lines, especially not title casing each word which I think that’s officially dead now in the email marketing world. I haven’t seen a ton of emails in my actual inbox so definitely in my spam folder. Joe: You’ve never inquired on a Quiet Light listing because I know that with my follow up drip campaigns I will capitalize the first letter of each word in the subject line. I need to stop that is what you’re saying? Lianna: [inaudible 00:20:21.1] test for you just … yeah start running an alternative version of each of those emails with A. more [inaudible 00:20:26.2] well, if you were to do a true test you would just uncapitalize the rest of the sentence but you can try more conversational subject line. Then I could do a whole thing on subject lines so I like them a lot but yeah making- Joe: So it’s the first point of contact- Lianna: Yeah. Joe: And it never occurred to me to chill out a little bit and be more casual even though you know we were … and hopefully anybody listening will take this and apply it to their own business but we are online business brokers. We’re selling businesses for a million dollars or whatever the case might be and sometimes we think we’ve got to be buttoned up and serious. We’re working with entrepreneurs. We all work remotely, around the country, around the world in Brian’s case and we try to be professional and serious but we can be professional and casual and funny at the same time. Lianna: Yeah. Joe: [inaudible 00:21:09.9] on our subject lines. Lianna: There’s a scale I think you don’t have to go- Joe: Are you telling me to loosen up? Lianna: A little bit. I mean you … do you have that top button undone? Is that a- Joe: I do. Yeah. Lianna: See we’re great, yeah, no tie. Joe: It’s hot. Lianna: I don’t think [inaudible 00:21:22.6] video so I just look like garbage so you know. Joe: I’m in North Carolina, Lianna is in New Orleans did I say that right? Lianna: No. I’m going to … no. Joe: Say it, give it to me. Go ahead. Lianna: New Orleans born and raised. Joe: You actually have to enunciate it? Lianna: Not New Orleans. New Orleans. Joe: New Orleans not New Orleans. Lianna: [inaudible 00:21:42.3] people say New Orleans. Joe: All right it’s New Orleans. Lianna: Never New Orleans unfortunately. Joe: Okay all right. Well, we’re both hot and you know figuratively anyway. And that’s why I have my top button undone. What other things can people focus on besides of the subject line, some of the stuff in the first point of contact with customers, what other little weird places do you think that they could focus on and try to be a little bit funny or a little more personal that the average person wouldn’t look at that you’ve seen? Lianna: One of my favorite places to look at is copy surrounding a call to action. So any time you’re going to ask somebody to do something you should probably be addressing their objections and previewing what’s going to come next. And it’s really nice to see a human and funny touch around the ask. So I can’t member if I mentioned this when you saw me speak but I wrote a call to action to start a free trial for a software product. And normally underneath you would see small text that says no sign up required or credit card required or whatever your information is safe with us that kind of standard objection reducing stuff. We wrote … oh I wrote a copy there that said we do ask for your credit card but it’s just because we love online shopping. It’s just a little reward for someone reading to feel like okay all right we’re good. And obviously, that person has to have a sense of humor because if they take it seriously then they’re not going to sign up but who is your target customer is that a person without a sense of humor? No. Joe: Again personalize it, make it feel better. I’m looking at your site now and I must have moved my mouse off the screen and something popped up and it says I’d love to email you and there’s three O’s in the word love. Lianna: Yes. Joe: Now what is down below there, it says subscribe now and then nah, fam. Lianna: Nah, fam? Joe: What does that mean? Lianna: It’s a no thanks, it’s another way to say no thanks. So you can just … it’s good to know that it’s not coming across entirely clear to everyone. Joe: Well. Lianna: It’s like you can sign up or no, fam. Joe: But I can tell like a human wrote this which is again exactly what is supposed to happen. And for those again listening and not watching so this … all of you have this exit intent … exit pop ups on websites. This one is personal and funny and I’m actually reading it. Normally I just X out, but now I’m reading it because you spelled the word love wrong, no fam; I don’t know what that is. And I believe it’s you in the image. Are you drinking coffee out of a box? Is that what’s happening there? Lianna: Drinking box wine. Joe: Yeah. So there’s a picture of Lianna sitting at her desk, her laptop is open and she’s got a box wine up above her head and she’s boozing it up. It’s very very entertaining and it made me stop and look at it where I go to all of your websites whenever I’m doing work with you and if there’s a pop up I generally just quick X as quickly as I can. So very cool just one other- Lianna: Yeah that’s a great place the exit intent pop up is so hard to get people’s attention and people often think like you know I have only two sentences or I have to cut my offer just $20 off and it has to be no longer than that. But I worked with a client we … this is for my other business SNAP Copy so it’s me and my business partner James Turner, we optimized his opt in offer to get people on his list for free planning. He runs a productivity website and the headline that we ended up going with was hey don’t leave without your goodie bag. And it was boosted opt-ins by 129% and there was some additional copy and it was a pretty long paragraph of what they were going to get when they signed up. But people read it and signed up a lot more than they did when it said get free planners. Joe: Hey don’t leave without your goodie bag and it was an online thing just to get people to sign up and was there like I [inaudible 00:25:19.8] a goodie bag as a swag bag when you go to an event like Blue Ribbon Mastermind. What kind of goodie bag was it? Was it just something you could get electronically? Lianna: Yeah it was a digital goodie bag. It was like free weekly agenda or a free monthly planner. He has a lot of free resources like that. Joe: But he didn’t say free gift it said hey don’t leave without your goodie bag? Lianna: Yeah. Joe: Simple. You think it’s simple but it’s- Lianna: Yeah. Joe: People get too buttoned up I think. Lianna: Finding new ways to say also the things that people are already accustomed to because we’ve seen free gifts so much, we’ve seen claim my deal a lot. I feel like that’s kind of … it’s still working because it’s very clear but if you can find another way to say something that doesn’t obscure the meaning of the copy then it’ll get people’s attention. And they’re like oh I haven’t seen that before. Joe: Okay. So pretty simple stuff but not something I think everybody can do. You have a special skill. You’re funny, you actually do stand-up comedy as well right? Lianna: I do. Joe: You do. Are you funny? Of course, you are right? Lianna: People … you know I feel like I want to write a bit about that but it might be to hack because there have been better comedians writing bits about that. But someone did that to me the other day she was like so I don’t get it you do stand-up but like you’re not funny right now. And I was like maybe I’m not inspired. Joe: Ah. Lianna: You’re not a good audience, I don’t know. Joe: I’m glad I didn’t say that. I think what you do is fantastic. You know back to my radio direct response days I would write 60 second ad copy and we would be able to get direct responses; how many people called in when we gave out that phone number after 60 seconds. And so we knew exactly how well the copy worked. You’re a conversion copywriter so you found a way to do the same thing and boost conversion when somebody visits a website or open emails and things of that nature. Do you find your clients doing split testing with your copy against with the original copy or things of that nature or did they just say this is really good it’s funny let’s go ahead and just put that in place and then they see how it works for a week or do they do an actual split test? Lianna: If … so this is like this is where the cobbler has no shoes because I should be making sure that they do that but sometimes my clients are in that stage between small and medium business where they don’t really have the team to split test appropriately or like they don’t want to learn how to use Google Optimize, Optimizely, or any other split testing tool. So usually it’s we see how the control over the original copy was doing then we implement the new copy and it sort of functions as the test and we see what the lift is; the uplift or downlift usually. Usually up. Joe: Usually up, okay. Well, I had an experience many many years ago where we had … when we take the phone calls and someone didn’t want to buy the product we would get their name and address and would send them out this simple little trifle brochure. Really simple, black and white or I think there was blue and white and you could tell that it was somebody stuffed the envelope and we hand wrote it and it went out. It was from that person that you talked to on the phone. We had a consultant come in and say oh that’s not very professional, we need to step it up, we need to get a multi unfold brochure, colors and charts and graphs and all this stuff and of course we have to print out the addresses and make a professional. And conversion dropped by at least 50% and it was a real eye opener because it was in that personal touch and feel. Lianna: Yeah. Joe: And so I think everything that you said up on the stage at Blue Ribbon Mastermind made me want to have you here because I’ve seen it firsthand and I know how much a word here and there and a feeling here and there converts. And it’s really tough online, it’s getting easier and you know hopefully some of your work is being tracked with before or split tested and so your clients know. But I think that all I know is when I go to a site like yours I want to stay on it and I want to look. Lianna: Good. Joe: As opposed to a pop up like I know you got a rubber chicken being cut in half and blood spurting, it’s cute and funny so I love it. I think what you do is fantastic. How exactly would people reach out to you? Is it simply punchlinecopy.com? Lianna: Yeah. Joe: Can they get a sort of assessment? How do you work with your clients? Lianna: Yeah so I have different product test services on my site. Sometimes people just need … they want to use me as like an ad hoc email copywriter for instance. They’ll come in and like buy one or two emails and they’ll say rewrite my abandoned cart email because again it’s close to purchase. Or rewrite my welcome email so I get fewer unsubscribes when I add someone to my list. So I have one off emails, I have something called upper cuts which is where I do an audit of your landing page from my heuristic perspective. So I’ll take any customer research data that the clients have for these kinds of audits; the more the better. But I’ll just look at it and say like this UX is garbage like this photo doesn’t open, I can’t zoom around the product, the call to action isn’t visible enough from far away. And then I’ll rewrite the copy line by line. And then I also do custom projects and I’ve got an intake form there. Yeah, there’s a lot of ways to work with me. Joe: Can you be funny in a sponsored ad or a Google ad? Do you work with anybody in those regards? Lianna: I don’t do a lot of top of funnel acquisitions. Joe: It’s a little tricky. Lianna: I’ve tried … I mean I’ve done it. I haven’t run ads for my own business in forever. I probably should but I’m the first result for funny copywriter so who needs to? Am I right? Joe: So one other simple clean example is again … and people could just go to your website and go oh that’s cool, that’s cool, that’s cool, and get some ideas. Again punchlinecopy.com but you know folks you probably have a chat now talk to us little thing down in the lower right hand corner of your website so somebody can chat with you. Lianna’s has a picture of her. Lianna: It’s a bit [inaudible 00:30:59.5]. Joe: A caricature of you and it says you there and it has you looking up over the little pop up bubble as opposed to the standard stuff which is great. Again it’s personal and makes it me want to click it just to see if you are there. Lianna: Awesome. I’m not because I’m doing this but I just- Joe: Everybody go to Punchline Copy and click you there and see what happens. Lianna: Or send me an email. Most of the stuff on my site that I think people like the most is just stuff that makes me laugh because I thought it was hilarious to have that little thing pop up in the corner. Joe: I like it. I like it all. Well, I think it would be great if some folks can use your sevices. Lianna: Yeah. Joe: And we have people on that I think can help more than anything else whether that’s somebody that is in the process of trying to grow their business and make it more valuable or some of that’s going to buy one and tweak it and make more valuable than what they bought it for. And I think copy is so essential because if it converts you are a … again conversion copywriter that just gets them more value for the money that they spent on advertising. Lianna: Yeah. Joe: So it is fantastic, we will put your details in the bottom of the show notes so people can reach out to you and any last minute thoughts on copy that people should think about [inaudible 00:32:18.1] got here? Lianna: I mean I always want to challenge people to just try a joke somewhere. Like take your most boring email in any of your series and go in and add a joke or add an aside, you know add a PS that’s kind of weird and see what happens. Joe: Just to see what happens add a PS; I like it. Lianna: Yeah. Joe: Well PS folks thank you for listening to the Quiet Light Podcast, I appreciate it. Lianna, thank you so much for your time. You are awesome. Lianna: Thank you. And so are you. Joe: Well I appreciate that thank you. Links: PunchlineCopy.com Punchline’s Facebook Page Lianna on LinkedIn

If you sell an apron, a pacifier, or a pool cover, how do you create recurring revenue from that customer, and build a more valuable business? That is the question I asked our guest John Warrilow, and we got some pretty good answers! If you don’t know who John Warrilow is, where have you been? John has written several best selling books, consulted with the like of Apple and Google and has built and sold multiple companies around the concept of subscription based revenues. IF you want to build a more valuable business….listen up! Episode Highlights: How entrepreneurs who have a physical product business can start a subscription base and achieve higher value in their business. Think about the things people use on a recurring basis and integrate that into your business to raise the value of the tail of your revenue. How Amazon started buying into the subscription business upon acquiring diapers.com. Ways John helps folks take a niche product and build out that subscription aspect. The key is convincing the end user to agree to a subscription for those consumables they uses and reuse. How you can stuff value into the subscription so users are tempted more by the higher value than by just getting 10% off. The many factors involved in the churn rate of your subscription business and how to use churn rates to calculate the average lifetime value of a subscriber. The ideal is negative net churn. Strive to offset churn with upgrades in revenue. The importance of cross selling to existing subscribers. Find good subscription expertise before setting up your recurring revenue business. Links: Connect with John on LinkedIn Check out John’s books on Amazon Built to Sell Podcast John’s website Zuora Recurly The Value Builder System

Ryan Daniel Moran was a preacher-in-training turned entrepreneur. He moved to Austin with little to nothing to his him name, and launched Amazon businesses that he eventually sold for over 8 figures. Ryan did us all a solid – really – by documenting and sharing his journey. The Freedom Fast Lane Podcast helps entrepreneurs at every stage of their business, from startup to exit. In this interview, Ryan shares his top three “mistakes”, or as discussed, things he wishes he did differently as he looks back. He openly shares his story and journey, in the hopes that other entrepreneurs do things to maximize the value of their business (and life). Through Ryan’s conference, Capitalism.com, he helps bring like minded entrepreneurs and experts in the ecommerce space together to build brands and businesses that last. While he may be a preacher-school-dropout, Ryan still has a way of delivering the goods when it comes to advocating doing the right thing…so good things follow. Episode Highlights: [1:25] Who is Ryan Daniel Moran? [4:38] Is it better to buy or build? [6:43] Ryan thinks we’re in a “seller’s market” [8:05] What are Ryan’s “mistakes” and what would he do differently. [11:30] Does it matter if you like your buyer? Does likability matter? [13:52] The likable buyer story…who won out over an all cash buyer. [15:12] Mistake # 1 – playing the short term. [17:25] Mistake #2 – telling people what to do and diminishing their talent. [18:51] Ryan shares his staffing team numbers. Inhouse and remote. [20:06] Mistake #3 – Ryan wishes he spent more money on advertising, customer acquisition, and brand building. [22:51] Why is a 100% Amazon business worth less than a Shopify store? [24:00] What channels would Ryan expand to – beyond Amazon.com [25:30] The first “nut you have to crack” [27:02] Ryan disagrees with Joe! [30:40] Brands last, product businesses don’t. [31:06] Should you be thinking about a possible exit at all times? [33:05] What gives Ryan the “goosies”. Ok…he didn’t say goosies, that was JLo. [33:58] Know what you will do with your money before you sell! [36:10] Should you plan your next brand before you sell, or stay focused? [39:29] How do you get more Ryan Daniel Moran Transcription: Mark: So if I could go back in time I would do a number of things different than I did in my entrepreneurial past especially before I sold my first company. And I have told you the story before that when I sold my first company I sold it for $165,000 only to find out that a year later the same person who bought the company got an offer for 350,000 without changing anything about the business at all. So … and there’s a lot of regrets I have by not going back in time obviously I think anybody would like to have that ability. Joe: I’m glad it’s that instead of saying you’re bringing me on as a business partner. Mark: Well, you’re here so I can’t … I might not say that to your face. Only when you’re on vacation and I have somebody else filling in as guest host. Joe: Well, Jason doesn’t listen to the podcast, let’s talk about him. Mark: Right. Exactly. Joe: Conversation … no regrets there. Yes and Daniel Ryan Moran was our guest and he talked about some of the regrets or as we called the mistakes because that’s how he learns in life as many of us do by making mistakes and in trying not to make them over again. Fascinating … fascinating yes they’re our podcast today Mark. I don’t know if you recall … if you were there for his presentation at Smart Record over the last summer in Austin but he got up on stage and he spoke for 60 minutes with no script, no PowerPoint presentation and everybody was captivated. And the information that he has in it … volume of entrepreneurs that he works with and the velocities, and the approach, and everything about the way he does business and the way he literally … I mean not literally, preaches business. Okay, he’s a … he was going to be a preacher so I want to say preacher school dropout. He chose to be an entrepreneur instead but the way that he talks about things is spot on with the way that we see the most successful entrepreneurs run their businesses. They focus on a number of different things and they implement those and maybe someday if they choose to exit they’re in a great position to do so. Ryan talks about all of that including his own two exits that combined totaled over eight figures. Mark: Daniel Ryan Moran, same Moran that comes from Freedom Fast Lane right? Joe: Freedom Fast Lane Podcast where he talks about his story. You know five years ago he had a car and he drove to Austin, Texas and he decided he was going to launch an Amazon business and record his journey. And his journey is not over yet. It’s on a new adventure, a different larger adventure but his journey kind of came to a new chapter after selling the last Amazon business that he had. But he talks about it all the way through on the Freedom Fast Lane Podcast. He got tired of seeing people do things the wrong way and learned ways to cheat at conferences and started to do his own conferences through capitalism.com and bringing good like-minded people together that build strong foundation long term value businesses and he talked about all of that today. Mark: Fantastic I can’t wait to hear it. Let’s go to it. Joe: Hey, folks, it’s Joe Valley from Quiet Light Brokerage and today I’ve got somebody that a lot of you might know already. His name is Ryan Daniel Moran. Ryan, welcome to the show. Ryan: Joe thanks about having me in, let’s make some magic. Joe: Listen I was having a barbecue last night we had some friends over and this is an absolute true story and one of them is an entrepreneur wannabe. She’s in the corporate world and she bought some Amazon products and she tried something and it didn’t work but she’s going to go at it again someday and she’s grilling me … she always asked me how things are with Quiet Light Brokerage and she starts asking about the podcast. I said yeah we’re doing all right and hey have you ever talked to Ryan Daniel Moran just like that and here you are today we’re talking to you. You’re kind of a little celebrity I should say … little, you’re kind of a celebrity; a rock star maybe for this … look it was a 50 year old woman. She’s rather attractive and she knows who you are. Ryan: Well you know it’s like my ideal market is attractive 50 year old women. We all know that that’s the market I’m after right now. So tell her to give me a … maybe call me maybe. Joe: She loves listening and the fact that you’re first and foremost helping people that’s what she loves about it. She says someday she’s going to get back to it but she loves listening and she’s going to take that leap at some point in the future so good for you. And listen as I said prior to the intro we don’t do fancy intros. So if you would … I know it’s hard to talk about yourself but give folks a little bit of background about yourself; who you are, where you came from, and what you’re all about. Ryan: Yeah. I invest in and I start physical products brands. And the way that I got to that point was actually as a pastoral student back in 2006. I built my first website and started my first business in between high school and college on my shared dial-up computer in my living room and hand coded websites using raw HTML in a software program called Dreamweaver. If you are old enough to remember Dreamweaver and you know it well. So what’s funny is we hear a lot of people who are talking about building and … or selling businesses thinking about the good old or either like all the opportunity is gone now or the good old days have these … man, I was hand coding websites in Dreamweaver on a dial up computer. Do you realize how much more opportunity we have now being able to build websites on platforms and sell products on Amazon? So the opportunities are way way bigger now but I was just trying to find a way to supplement my … what I expected to be $30,000 a year salary as a pastor. Now fast forward a few years I did not finish the pastoral route for reasons that would be probably best left on a second podcast that you have Joe that’s going to be called quiet skepticism. Joe: Yeah, some kind of … something where we’re helping people, we’re guiding them off that path right. Ryan: Exactly; quiet go to the light we’ll call it. And I did not finish that route and I became a full time entrepreneur. So I was in really involved in the internet marketing space for many years until I really decided or realized I hated that crowd. I didn’t like hanging out with those people. So I was like what a conference where those people hung out and I took the skill set that I had from Search Engine Optimization from Pay-Per-Click Marketing from Email Copyrighting and I applied it to physical products brands. And I’ve had a couple of different exits in the physical products world and now I’m an investor in physical products businesses because it’s what I know. It’s who I can help the most. And I think it’s one of the biggest upside is in the market right now whether you are selling or building a business or buying a business, I think there’s a tremendous amount of white space with the transition from big brands into more what I call micro brands mostly Internet based that’s where I see the biggest opportunities right now. So that’s a … I’ve had a couple of exits and the total over billed were eight figures in cash exchange. I still own a minority stake in a few of those businesses and have a portfolio business but my primary focus is investing in physical products brands and I have a media company for entrepreneurs at capitalism.com. Joe: Okay, so when it comes to investing people look at buy versus build. In fact, we had a podcast recently with our newest broker Walker Diebel who wrote about a book called Buy Versus Build and there’s a really long subtitle and it was a … it quickly rocketed to the top 10 podcasts that we have. And you’re talking about investing, do you think it’s better to buy versus build at this point in your career or would you recommend somebody that’s just starting out to scrape some dollars together and bootstrap something and start? Ryan: Yeah, it’s better for me to invest but it wasn’t better for me five years ago. In 2013 when I took my first sale on Amazon.com for a physical product I know business investing in physical product brands. I know businesses buying physical products brands now … back then I was buying a lot of websites. And you know what I was buying Joe? I was buying search engine friendly websites with email lists … social media followings weren’t this big back then, but with audiences, followings targeting each market that sold affiliate products; because that was what I knew. Joe: That’s what you knew. Ryan: I would have been a lot of people who are like looking for the system and that you are the system. You are the machine. And your machine is unique to you. So applying your machine to different opportunities is where value is created. So for me, I’m … at this point, I have more upside as an investor because I already have all the retail connections. I have the connections to sell businesses. I’m connected to other investors. That’s my own skill set but the entrepreneur who I invest in is way better suited to start that company than I am and that’s what capitalism is. Where I get the value that I bring in combination of the value that you bring and when we bring them together it’s greater than the sum of our arts. And so for me yeah I’m … I have more value as an investor but to say like it’s better I think would be a mistake. Joe: You know I think you’re absolutely right. It depends upon the individual’s situation without a doubt. I bought and I’ve sold and I’ve invested as well and I can say each were successful in their own way and each were very very difficult in their own ways as well. You’ll learn along the way from the mistakes mostly. Ryan: If I could Joe I will add though, I mean globally I think we’re in a seller’s market. I think we’re looking at buying versus selling if I give it a binary choice I do think we’re in a seller’s market right now. Joe: I have to agree with you 100%. When we have a good quality listing come … I had a conversation with someone this morning who wants to buy. And he’s a referral from somebody who already bought and this guy is doing great so I want to do what he’s doing. And the response is look when a great listing comes along you need to be prepared. So the more listings you look at the more you’re going to know the right shit when it comes along. And you need to be able to act fast because you and a dozen other people are doing the same thing and they’re going to make an offer on that business. So I agree it’s a seller’s market but at the same time, the multiple still don’t get pushed too high. It’s still the buyer to decide that. You and I as sellers, as brokers can pick whatever number we think the value of the business is but we don’t make the final decision at the end it’s usually the buyer. The seller’s got a lot to say about it because they can say yes or no. But it’s still the buyer makes the decision in terms of the value for the most part. But you just recently said you’ve exited a couple of different times in the last few years. What did you learn in that process if you look at the exit? Or maybe do you want to talk about the fact … the mistakes you made maybe building and what you can do to help the entrepreneurs that are listening or perhaps the exit and maybe a little bit of both. Ryan: Yeah well, there’s one thing in particular that I think was on the stake if you will and it was thinking that the buyer had all of the control. By the way, this is C money right here or by a … my … he is the one who wants to make great on the Internet. Joe: For those listening and not watching somebody just walked into the background. Ryan: Yeah, so the mistake that I made was thinking that the buyer had all of the control. And if I could redo this Joe, the truth is if you built something, if you built a business you’re the one with the asset. You’re the one with the goods that money is chasing you, people want to buy you and so often the seller comes into market and is like the thing that I’m after is the check and I’m hoping that I get the check and that immediately puts you in the frame in which you’re the after. You’re the one who is not in the power position. So we share them with an offer and the seller is like thank you please oh please Mr. Money Pants I would like your money. And now they’re in a position to beat you up over earnings, over … in the negotiations. So what I wish I had done was recognize the fact that I’m the one with the goods. I’m the one with the asset that people want. I’m the one courting the offers. People are making offers to me. There they want one I got not the other way around. So if you’re in that position and you’re willing to say no and you combine that with the turn ship that says here’s what I’m looking for, that to me puts the seller in the frame of mind repair and the negotiating position. I didn’t do that. I discovered that after the fact and I really could only have learned that by going through the process. I learned … I personally learned by making mistakes and paying for them later. Joe: We all do. Ryan: Yeah but that’s a mistake that I wish somebody had told me before I went to market. Joe: Or is it … the buyer that you’re referring to is it a strategic buyer or did you have your business officially listed and people came to you? Ryan: Yeah, we had it listed and we were acquired by an equity group. I still own a minority stake in that company and I’m in great terms with the equity group. I’m really happy with the buyer. I have become friends and obviously business partners at this point. But had I gone to the market with terms that I wanted I probably would have ended up in a more favorable financial position when it came to closing. Joe: Well, the next time you have a transaction you’ll know that and you’ll be able to make adjustments. Ryan: Right. Joe: Really I think like you said the check isn’t the end all, it’s more about … I think almost in many ways what your next adventure is going to be. I know that a lot of folks that I work with and myself included when I exited I was just … I sold too late. I was emotionally tired and I think that’s the absolute wrong time to sell. You should sell … you should plan to sell, just don’t wake up and decide to sell. But when you’re emotionally tired you’re not doing everything that you can to maximize the profits of the business and that’s going to drive down the value. And you’re going to get beat up at the end if you’re so committed to that check that you can’t negotiate a little bit more for something else and be willing to walk away from that buyer if they’re if they’re not a good buyer. And correct me if I’m wrong but just tell me how you think here, I always find that it makes an enormous difference if you like the person that’s buying your business or the one … if you’re buying a business from. It’s not just about the check. It’s not just about the money. It’s the people you’re doing business with. And I think that as a seller you can get more value if you’re respected and professional and likable and the same as a buyer, if you’re a buyer and you’re professional and likable and complement the owner on the business that they built that you’re going to get a better transaction out of it versus all the hard core raw street negotiations. What are your thoughts on that? Ryan: I don’t know if you are right or wrong because I intentionally don’t do business with people that I don’t like. [crosstalk 00:15:45.7] Joe: So, therefore, anybody that wants to buy a business from you if you don’t like them then you’ve got to do that to work with somebody you like. A classic- Ryan: I don’t think everybody has that mentality though. I think I would even go as far as to say the majority of people are buying and selling based on numbers or like the deal and very few entrepreneurs get to find every purchase as a person. And so I think most people are approaching it by numbers and logically rather than is there a connection here. I personally … just like for the protection of my own lifestyle am willing to say no to anything that I personally don’t like. And what that does is it always puts me in a strong negotiating position because if I don’t like somebody I have no problem walking away. And the person who has … the person who is most willing to walk usually has the upper hand in the negotiation. Joe: I agree 100%. I find that from a buyer’s perspective one of the questions I get a lot from buyers if I’m up on a panel or speaking or something like this is how do I negotiate up against an all cash buyer, somebody that’s got more money than me? And the tried and true answer is really is be likeable. It’s … you don’t necessarily have to have more cash to get the deal done and I … the classic example is I sold a business last fall. It was about two and a $2.5M and the guy had two full price offers within the first 10 days. One was from an all cash buyer who was a little rough around the edges and was hard to work with. The other was from a really likable guy who was buying with an SBA loan and actually required 10% seller financing in that. The entrepreneur, the seller of this business had the choice; you could go for the all cash or you can go for the guy that he liked. He actually chose the full price SBA buyer and chose to carry a 10% seller note versus working with somebody that he didn’t like. So in that situation, I think it makes a difference in terms of … buyers that are listening be likable. If you’re working with a broker you absolutely have to be likeable because they’re … as you said it’s more of a seller’s market. And there’s a lot of buyers out there. There are buyers that are competing for that same business and when they’re likeable they’re going to build rapport and when you build rapport you sometimes learn about things before they hit the market as well. Ryan, talk to me about some of the mistakes you’ve made in your own business. Maybe two or three of the biggest mistakes that comes up at the top of your head. Looking back and learning damn I screwed that up if I ever do that again I’m going to it a different way. Ryan: Well, every time I’ve made a mistake it was because I was playing the short term. So when I have made short term decisions I usually make bad decisions. I like to say that the longer term that I can make decisions the wiser I am and the better decisions that I make. I said before that people forget that behind every purchase is a person … that goes for customers too and all relationships are long term relationships. Or the best relationships are long term relationships. So if you are aware that behind every transaction is a person and you play it like it’s a long term relationship you end up building the better company. Sometimes in spite of a short term decision, meaning … for example as we’re recording this there’s a … in the Amazon there’s a thing we’re calling review gate where Amazon is coming in and hit them onto your businesses and removing their reviews. And it’s been a bloodbath. It’s been absolute bloodbath. And the people who are soaring through it are people who have been doing of the right things the right way for the longest. And the people who are being hurt the most are the people who are the most profitable over the last couple years because they played the tactic game. And like there’s absolutely room for tactics inside of every business but those who have been building really solid brands and building audiences and building followings they’re going to soar right through this and capture a whole heck of a lot of market share. So the mistakes that I made were always in saying what’s the Band-Aid solution here rather than building for the long term. So we take a rule now in the business that we’re building, we say okay here’s the situation that we’re in rather than talk about how we’re going to fix it let’s say what do we wish we had started doing 90 days ago and that would have made today a lot easier to get through? That’s the decision that we need to make today which is a really hard conversation to have when you’re in reaction mode. But we force ourselves to ask that question because it usually addresses whatever the root cause is that we need to fix rather than going for a Band-Aid solution. So that being mistake number one, mistake number two would be as a leader telling people what to do. There’s a great book called Multipliers that really morphed my brain in terms of how I can affect [inaudible 00:20:52.9] people. And what I realize after reading that book was that I have been diminishing the talents on my teams by telling people what I wanted them to do rather than casting a vision and inviting people to build their piece of that. Now that seems kind of a nuance and maybe overly simplistic but I couldn’t emphasize enough the accountability that this book brought me on how much I was diminishing the people that I was working with, And the difference in energy and growth that happened once I started correcting those issues. So as an entrepreneur, we often have like our baby that we’re bringing in to our team and we’re telling people how to build the baby when reality if we’re working with smart people they’ll probably own that area of expertise better than we can even if we can’t see it. And the big distinction of that book highlights is someone who diminishes their team is usually the smartest person in the room but a real leader makes the rest of the team like they’re the smartest person in the room. And that was a huge shift in my overall happiness and with the growth of my companies and it’s something that I wished that I had done before I was building companies to sell them. Joe: What kind of staffing do you have just out of curiosity? Ryan: Well, the company that I just exited was a team of four. The portfolio of companies … of brands that I have is a team of five. And my media company capitalism.com is a team of six. Joe: And are all of those people in-house or do you do some … or the VA’s are they working remotely or they come to the office every day? Ryan: I’m only counting in-house people so that does not count freelancers. But no not everybody … we have … there’s, we are a distributed team. So like I’m recording this in my office right now, one of my team members is just right here my side. But people will come in and out. Some people … like we have a team member in Canada, we have a team member in Germany, but they’re all full time dedicated to [inaudible 00:22:47.0]. Joe: Good. I asked that because you know most people that are listening would probably be considered lifestyle entrepreneurs and they have to outsource staff and VA’s and people working remotely. So it’s good to know that even though they’re not coming into your office every day this is really important [inaudible 00:23:02.3] get their short term vision don’t have that long term vision so that you don’t have major major stomach aches with algorithm updates we’ll review gates in that situation and then over managing of the staff you know let them be their experts; anything else that comes to mind? Ryan: As far as big mistakes that I’ve made … I mean we talked about the mistake in selling and as far as building the business I’ll say I wished that I had spent more money on cold advertising. Like always like there’s never been a business that was like ah you know I think I spent too much on advertising. I’ve only ever said I wish I’d spent more on advertising. Joe: Yeah, where would you have spent it because these are primarily Amazon based businesses correct? Ryan: The businesses that I personally built, yes. Joe: Right. So where would you spend that money? Ryan: So we just identified the problem because you said they were mostly Amazon based businesses so had I done things even better I would have doubled down on non-Amazon advertising. Because what … if you’re an Amazon business which is like nails on a chalkboard to me because it means you’re dependent on somebody else. Joe: Right. Ryan: It means that you’re dependent on this channel and you’ve got to go double down on building a business has a different leg to the stool and that when you combine those things together magic can happen. If you’ve got an email list of 100,000 people that you’ve built from cold advertising or from buying tripwires and now you’re combining that with the power of something like Amazon.com that’s really really powerful. Most physical products sellers never make that [inaudible 00:24:32.6] or they get so myopic into one channel that they never spend the money and the time to go develop the advertising for another channel. I wish I had been comfortable losing my rear end on other advertising channels until I figured out those systems. It’s interesting Joe, it’s true that every channel you will lose for a while and then you figure out the systems and then you start to grow through it and you get profitable. The strange thing is that most people once they’ve figured it out and get profitable they’re unwilling to go do that hard work in another area. So the way that Amazon worked in 2013, ’14, and ’15 was if you spend until you grab long enough you could outrank everybody else and go win but I never … I lost that hustle when it came down to Facebook Ads or influencers and people start looking for the immediate ROI. In what business is there immediate ROI? When you’re building a long term brand that has sales potential … like buyers are buying the systems; they’re buying profitable systems because you’ve already gone through that hard work of developing the systems that are profitable. But it requires you to go build them so I wish I had spent more on advertising, been more willing to lay it on the line, rolled more back into reinvestment. So I’ll call that mistake number three. Joe: So for buyers and sellers that are listening, entrepreneurs that are listening it’s that one legged stool, two legged stool, three legged stool. If you’re 100% Amazon business it’s riskier than if you also have a revenue channel from Google Ad Words and driving traffic to your Shopify store and you might be doing wholesale or B2B things of that nature but right away as I’ve said before if you’ve got a business that’s just at within $100,000 in discretionary earnings that’s 100% Amazon same business $100,000 in discretionary earnings but you’ve got 60% Amazon, 25% Shopify, I guess that would be 15% percent [inaudible 00:26:36.4] my math here, another percent of B2B that business on the other side is going to be worth 15 to 20% more. So you might be breaking even or losing a little bit of money on that land grab trying to grab more customers but if you can turn that into even the same discretionary earnings that business automatically is going to be worth 15 to 20% more because the buyers will pay more for a risk averse business that’ll be around for the longer term so very very good advice. What channel would you go to first? Because there are so many options these days and building a channel off of Amazon is hard as you know. You’ve got to learn a whole new expertise. Where would you go first and what do most of your successful folks do? Ryan: Yeah and I’m actually going to cue on very creatively sidestepped this question because the obvious is Amazon. But where I would suggest is actually people double down on where the audience is. To me, this is the nut has to be cracked if their building a sellable company. And what that means to me it is for some people their audience hangs out following influencers. For other people that is they follow blogs or they have a blog where the audiences are already hanging out. Or some people they’ve got a Facebook where there’s an audience. Now what most businesses, especially like a million dollar businesses, are doing is they’re going channel first and trying to extract as much of it as possible. Like I’m going to go to Amazon try to rank and pull as much out of this pie as possible. Only a few people can win that game but if you switch it and you say where are my people who is the ideal buyer and where are they then the channel where you collect the order can always change. And that makes Shopify, Amazon, B2B a whole lot easier. The first nut that you have to crack isn’t where the buyers hang out apart from the sales transaction and then you bring those buyers to the transaction. So the transaction to me … Amazon, easy no question. Put your product on Amazon the credit card is already there, people are already looking for it. No question, easy, done. The nut that needs to be cracked is what happens one step before that. And if there is … like if you don’t have the influence, the list, the following, the traffic, the pay-per-click strategy that some way to go get those people and bring them into your ecosystem I think you are struggling from the get go and that’s the primary question that I ask the entrepreneur. Joe: Yeah and I think depending upon as you say the product and what they’re offering some of those different channels will make more sense. You know I had a conversation with someone this morning that has several brands and one brand has incredible numbers with email marketing and that same expertise applied to that different brand doesn’t do as well. Ryan: Right. Joe: They’re driving people to their Shopify store though Amazon keeps growing and out phasing everything else. So I understand identify where your customers hang out and then you’ve got to go find those customers. To own that list though you need to send them to your own store, not to Amazon. So are you sort of balancing between sending them to Amazon because it’s all there or? Ryan: No, I just disagree. So I think that the loyalty to the brand is the customer experience. And you give the customer the ability to give you money wherever they are most comfortable making the purchase. I heard Brian Lee say where it’s … Brian Lee is the founder of the Honest Company, the billion dollar brand with Jessica Alba, and I heard him say once that he considers it a win when the product is in the customer’s home. That’s when you’ve wo, not collecting it online e-commerce site, not getting into retail. It’s when the product is in the customer’s home. However, they get it and you want to release as little friction as possible getting the product into the customer’s home. You will own the customer experience when you have their data. You have the ability to communicate a message in front of them. So if you’ve got the email list and you send them over to Amazon, Amazon rewards that and your conversion rate is probably going to be higher sending them to Amazon that sending them to your Shopify store. So there’s a balance [inaudible 00:31:12.7] I know that I can get a higher immediate customer value sending them to my own web site because I can put them through upsells and cross sells to get their immediate data versus sending them to Amazon where I am going to have to work to get their data. I don’t have any upsell experience. They might see a negative review. And so the entrepreneur is going to have to play the game of where the numbers make the most sense over the long term. But I think that the actual customer experience happens in when you communicate with them. And that’s in the email message, that’s in the outside of just a transaction, not just where their credit card is being added but words being communicated. Joe: Okay, I get and I’m just going to repeat it for those that are … well not smarter than me; let’s put it that way. So it’s capturing the customer information up front, building that relationship with them, and then simply send them to the place that they can buy the product and experience the brand with the least amount of friction and get it in their home. Ryan: Nailed it. Joe: Okay. Ryan: That’s my opinion. Joe: And it all goes back I would say and it’s kind of almost unspoken that the brand has to be pretty amazing so focus on that first. Build a great product, a great brand so they have a great experience and then do all that other stuff as well. Ryan: Yeah and let me address that because that often brings up the question how do I identify a brand? Like what exactly is the brand. And the brand is the way that trust is communicated to a very specific customer. Most Amazon sellers have no idea over their customers they know what their product is. If you know what you sell and not who you sell to you do not have a brand. Or you might have a brand but it’s really lousy whereas if you know who the person is, it makes the product really really easy. I was just meeting with one of my team members today; we were expressing the frustration over one of our brands in our portfolio. Because when we acquired it, it sold a lot of product but it had no target market. And so we’ve had to do a lot of work to convert that brand into an actual brand where people are not just buying a product but they’re buying something and it says about them sells. Those businesses last, product businesses don’t because they’re commodities. You forget about commodities and the minute that there’s a better price or better customer experience their loyalty changes. But when you’ve got the brand people are very stingy with their trust. I want to give it to you, you have them for as long as you keep their trust. Joe: Very important message right there. Ryan, any thoughts in terms of whether someone should be building this business and always think about the future and possible exits; do you try to instill in them that they should know the value of their business in the event they wake up some day and want to move on or do you just focus on building that brand and when you’re ready the time will come? Ryan: You know the real … the temptation for me is to say that no, you shouldn’t be necessarily thinking about selling but I know that I’m in a different spot than everyone who’s listening. So I would say if you are building this to make money, be building it to sell from day one. Because the very act of being in it for the money means that you will burn out, you will wake up and want to do something else. It’s going to happen. So if that … and like let’s just be real about it, if you’re in it because of the payday, build it to sell because that’s what you’re in it for and the payday is the cherry at the end of the rainbow here. If you were in it because you’ve got a product you want to bring to the world then still develop the systems and processes that will keep you in the position to be in your zone of genius. And that will make you more sellable one day but I don’t think it’s necessary for you to know what it’s worth or be making decisions based on that. So these are different goals. Now I build companies that I’m excited about and I am building them in the same way that we make something valuable because I want to be in a position where I’m just in my zone of genius. But it’s a different mindset than if I’m building something because it’s going to be profitable. Does that make sense Joe? Joe: Absolutely; excellent …excellent. Hey listen I know we’re running out of time here I just want to say that last summer I was at the stock market conference and you got up and you spoke as did another dozen or so very very successful entrepreneurs. Each and every one of them had a PowerPoint presentation. You got up there with nothing. And you talked for an hour and the audience was captivated as was I. You have a gift thank you for sharing it. I appreciate it. Ryan: I just got goose bumps. Thank you so much, mate. I really appreciate it. Joe: How do more people get to experience that and listen to you and hear what you do share? Ryan: You know I’d love to answer that question, can I offer one more piece of advice before we go? Joe: You can offer a dozen more pieces of advice. Ryan: Wow, awesome. I’ll leave it to one but if you are in this to please have a plan of what you’re going to do with the money when you get it. Entrepreneurs are magicians. We remake things up here on thin air. We create value out of thin air. We create a bigger pie. We make money show up. And we also make things disappear. Joe: Isn’t that true? Ryan: And if you do not have a plan of what you’re going to do with the money it will slip through your fingers. I know you think you’re the exception. I know you think all I have to do is invest this at 8% and I’m [inaudible 00:37:11.5]. I know you think that’s how it’s going to be. You will ball the money. I … right now I just heard you think “no I won’t”, yes you will. So if you don’t have a net for catching the money and allocating the money for your lifestyle you will be back in the grind very very quickly. I promise you, I know you don’t believe me. I’m here to tell you that’s the case. Have a plan for what to do with the money once you get the money. It’s actually my favorite conversation to have. At some point, I’ll probably have more chops [inaudible 00:37:45.3] about investing once you have a big windfall. But for now, it’s like have a plan like a plan is better than no plan. And that plan would probably be best done after you sat on the money for about six months and you’ve gotten used to that money being in the bank account. Your second question or actually your only question was- Joe: Can I interrupt that? Ryan: Please. Joe: I definitely want to get to that but in terms of having the plan to exit, I’m always telling people look have your next adventure planned. Because entrepreneurs like you say they blow through the money, it goes through their hands like saying. I’m often saying maybe get that other opportunity started and launched long as it’s not competing to get the ball rolling. So that you got some working capital maybe you’re going to put it in … some of it you’re not as bootstrapped although you’ll be more successful probably if you are. Do you think maybe they should 100% focus on what they’re doing on that brand before they sell it up until the day they sell or maybe when it gets big enough and good enough and they’ve done enough right they can take some of their attention and start Brand B while they’re selling off Brand A? Ryan: Wow, Joe. The reason I’m saying wow is because my experience is pretty unique and that was I took about a week off and then I immediately went back to workaholism and it was the worst. It was a horrible experience. Now full disclose like at the same time I was going through separation and I’m going through a lot life changes. I threw myself into work right after the sale. I celebrated by reading books on my patio for like eight days and I was immediately back to workaholism. And I like … I roasted my body, I mean I so needed a break and I did not give myself that break. I don’t know if every entrepreneur was as burnt out as I was. I was more burnt out than I [inaudible 00:39:40.5]. Joe: Most ideal [inaudible 00:39:42.8] they come to me tired, exhausted, ready to move on. Ryan: Joe, it’s been over a year. I wouldn’t even say I’m back now. You know I’m probably operating at 75% of capacity because I never really recovered. So should you go right back into it? I don’t know. I think it depends on the level you’re at and your own wiring. I make really good decisions when I’m relaxed and creative. I make terrible short term decisions when I’m stressed. And when I’m in that workaholic mode I’m a terrible entrepreneur. I wish I had just blissed out for like three months; I didn’t. Joe: I don’t know what the folks that listen to you every week would do if you would disappear for three months though. Ryan: Well here’s the thing though Joe. I kind of did. Like my podcast sucked for like three months, three to six months and I was trying … like I’m sitting in front of mic trying to come up with things to say and I was uncreative as heck. So I sort of did disappear it was just a different way. And now I’m getting back to it and it’s a completely different experience. But I actually think I did my listeners a disservice by not taking a break. And if have been just really upfront and be like guys I just got an eight figure check I am going to the beach and I will call you when I’m ready. My audience would’ve popped but instead, I was like operating from this place of like I’m so … oh my goodness I’m so tired and I turned off a lot of people. I know it’s not the answer that you expected it’s not the answer I expected to give you. Joe: No, I like it. Ryan: But I think it’s true. Joe: I think sleep and rest and meditation or whatever it is to focus on is absolutely necessary. So back to that original question and you know finding out what they do with the money after they sell. How do they get more of Ryan Daniel Moran? How do they experience what that audience down at Smart Market and myself experienced where you just talked and everybody listened and took notes and all that? Ryan: Well, thanks so much, man, my media company is capitalism.com. My podcast is called Freedom Fast Lane. And I say things into a microphone and we hold events at capitalism.com that are specifically for entrepreneurs. And we’re actually … we just rebooted the Freedom Fast Lane podcast. I feel as though- Joe: With fresh energy. Ryan: What’s that? Joe: With fresh energy right? Ryan: Well yeah, I think you’d probably feel it from me. Five years ago I started this journey as a boy and I was … I just put everything I owned into my car, drove to Austin, Texas, started some new companies, I documented the whole experience from startup to sale. And then I kind of grew up while documenting the journey. And now there’s a new journey and it’s a much bigger one and so we just rebooted kind of the entire audience, the whole experience in the podcast. And my podcast is called Freedom Fast Lane. My company is capitalism.com. Joe: Okay. Well, I’ll make sure those are in the show notes. I’d love to see you be more successful on this new adventure, this bigger journey. Ryan: Thank you. Joe: Let’s stay in touch. I think I may see you at the capitalism conference at the end of August; let’s see. At the very least we’ll be to as many as we can be over the next few years. Ryan: Good to see you man, thank you so much for having me. Joe: Thanks for your time, I appreciate it. Links: Capitalism.com FreedomFastlane.com

Today, another serial entrepreneur, Rob Walling, joins us to discuss founding and generally running a bootstrap startup. We sat down and talked to Rob about his journey of getting his software startup off the ground, developed, and eventually sold with no outside funding. Rob Walling is not only the co-founder of Drip, which recently sold for eight figures, he also writes a blog and hosts two podcasts for startups. He is most known for starting, running and selling Drip but he has also bought and sold several smaller SaaS applications, including HitTail. Finally, Rob is co-founder of Microconf, a bi-annual conference for software startups. Rob’s goal is to continue to acquire new businesses while maintaining the time-clock free lifestyle his years of software startup and acquisition experience have afforded him. Episode Highlights: The story behind Drip and what led Rob into marketing automation. Building and growing a SaaS company. Launching a new software business without a lot of staff or cash. Building the automation that ended up being the key factor that got Drip on the consumer radar. How the company managed to compete against the larger players. The luxury of being a small team and working primarily in person. Why Rob would now choose remote over local. Tips for hiring high quality candidates that fit in with your company’s principles. When you know it is time to scale up your startup. Knowing when you have something that people really want. How to recognize when the option to sell comes on the radar. Knowing when you’ve found the right buyer. The importance of putting all the deal-breakers on the table and sticking to your guns. What small startups learn in the acquisition and transition process and how that changes their teams. The story behind Microconf, Rob’s bi-annual global software conference unlike any other. Transcription: Joe: So this morning we were deep into a program called GetDrip and it’s what we use for our automated email sequences. And I understand you had the founder of that gentleman … with that software as a service program on the podcast that’s all right? Mark: That’s right and I think a lot of our listeners are probably familiar with Rob Walling. He writes over at Software by Rob. He is the host over at Start Ups for the Rest of Us Podcast. He’s the founder or co-founder I should say of MicroConf the SaaS conference. He is also the founder of HitTail an SEO software and of course Drip – Email Marketing Automation; one of the leading email marketing automation softwares out there which was acquired by Leadpages a few years ago in an eight figure acquisition. So really cool guy, tons of experience in a lot of different areas especially in that start up environment. And Joe you and I like to have these calls with people … these conversations with people where we try and like pull out a certain lesson or something else. Remember the episode with Mike Jackness and the crazy high open rates and returns that he gets on his Facebook marketing. I went into this without any specific agenda. I just want to talk to Rob about his story and kind of the adventure he’s been on since he started up Drip and some of the other things as well. But we didn’t get into much else because we just kind of talked about his journey with Drip which was fascinating. And one of the things to think about with Drip, they started off in a world where there was really big competitors. You had Infusionsoft, you had Klaviyo that was still big at the time, you had MailChimp which was absolutely a monster, AWeber which had been around forever. And here you have this little start up with no funding just a handful of coders working out of basically a closet as it were. And they ended up blowing up into one of the biggest email marketing automation softwares out there and being acquired for eight figures by Leadpages a few years later. And so we talked a lot about how they do it … how do they go through that, how does he hire people? We covered a lot of territory but it was fascinating. Joe: Well I think you said founder maybe five or six times there so I would think you would have to be fascinating when you’re founding that many companies and that successful. So I don’t think anybody wants to hear you and I talk about this anymore. Let’s just go right to Rob. Mark: Yeah let’s get to him. Mark: Rob thanks for coming on. Rob: It’s my pleasure thanks for having me. Mark: All right so you’ve listened at a couple of the episodes of the Quiet Light Podcast you know how we work. Why don’t you give people a quick introduction as to who you are? Rob: Yeah so my name is Rob Walling and I’m a serial software entrepreneur probably most known for running … founding and selling Drip which is email marketing or marketing automation software. I’ve also or run a number of other SaaS apps including HitTail which is an SEO tool. I co-founded MicroConf which is a conference for self-funded startups. And I have a couple of podcasts. One’s called Start Ups for the Rest of Us and the idea there is to help people … give people an option in starting software and SaaS companies that’s like you don’t need to raise funding to do it. And that podcast has been running since 2010 so we have like 400 something episodes. Another one is called ZenFounder it’s with my wife who’s a psychologist and we talk a lot about just trying to stay sane while running a business. Mark: Well trying to stay sane while running a business that’s a pretty hard thing to be able to do. Rob: It is, yeah. Mark: Yeah. That’s pretty cool so we have a lot that we could talk about here. I want to talk a little bit about just building and growing a SaaS business. But one thing I want to start off with here is you’re kind of like a member of the very old guard when it comes to Internet entrepreneurs. When I started in the online world it was kind of expected that you do everything right? You code, you market, you design, and you do everything top to bottom and it’s a lot harder to do that today but you’ve been [inaudible 00:04:35.0] keeping up with that. So are you still actively doing a lot of the coding? Rob: I am not. I backed away from it. I … you know we’ll software professionally for a paycheck from about 2008 and I really enjoyed that time and it basically gave me a leverage and a little bit of savings to be able to start acquiring businesses. I mean that’s what a lot of people don’t know is I really only started a couple of software companies. I’ve bought way more than I … products and websites and software SaaS apps than I started so … but around let’s say 2011, 2012 it just became … it just was no longer worth it for me to code. My time is more valuable doing all the other stuff … that pulling the big levers to move the business rather than sitting behind a [inaudible 00:15:19.12] even though I love it. I still write code on the weekends though. I hack with PHP scripts; I was scraping Twitter feeds and trying to do sentiment analysis. I was … it’s just myself having fun. It’s just fun to build things but I don’t … I have a push production code in probably five years. Mark: Yeah, I used to code … I started to code out of necessity when I first was an entrepreneur and at first, I had no money so I was like I need to build this … I think I built a very basic pay per click search engine and kind of advertising platform. I did that and pearled all things and then yeah again self-taught myself and since then I’ve missed doing it but I just don’t have the time to jump back in. So the fact that you’re doing it on the weekends [inaudible 00:05:58.8] for sure. So let’s talk a little bit about building and growing a SaaS company because you’ve done it a couple times, you’ve done it successfully, and maybe also I didn’t know that you were active in the buying world so let’s talk a little bit about that. Let’s talk about what you look for when you are buying this SaaS Company and how do you go about some of those code challenges. So let’s start with a basic question; ball park number how many businesses do you … would you say that you bought over the last five or six years? Rob: Let’s go back a little further because see … once I started Drip which was 2012 so I bought zero in the last six years. But before then from let’s say 2005 was my first acquisition and 2011 was my last so over that six year period I probably purchased I would say 25 or 30 different. They’re either software products, SaaS, or even … I mean I bought like half a dozen Ad Sense websites back in the day. So I really enjoyed it. I mean the idea of being able to skip product market fit and not have to do all the hard work up front and have a great history has always been attractive to me. Especially if someone … I mean when I was writing softwares I was doing, I was contracted, I was doing 125 an hour or 150 an hour sometimes and I mean my time was super valuable. I was booked 40, 50 hours a week and so I was like wait let me get this straight I couldn’t … back then it was Flippa, right? I mean it was before you guys, before FE and other folks, and I would go on Flippa and pay 18 months of net profit and sometimes I got totally hosed on it because Flippa can be a little bit dangerous but the ones that worked were life changing for me. By 2009 I was full time just on products. Sorry, that was a long answer but that’s the value I see in acquiring over. I’ve told my wife like if I do this again … because I don’t know if I’m going to do it [inaudible 00:07:44.5] have to but it’s just a lot of work, there’s no chance I’m doing it from scratch. Zero chance that I will do something from scratch for the rest of my life. I will always acquire from this point on. Mark: And obviously, we are big believers in that. I mean that from product fit and like you said and doing our work is difficult. When you started Drip … when did you start Drip? Rob: We worked on the code in December of 2012 and then we launched in 2013. Mark: Okay, and you were originally just sort of an add-on or a layer on top of existing software programs right? Rob: That’s right. Mark: So like AWeber and I think mail Chimp was one of the main vehicles. Rob: Yeah, we were just like a pop up and auto responders but we also fed into mails because we didn’t … we couldn’t even send broadcast emails at the time. Mark: Wow, all right so then you layered on top of that and did you always have in mind with Drip that it was going to be an automation; the sort of kind of logic sequence. Rob: No, we didn’t. And in fact, we resisted it pretty heavily because I didn’t want to get into the marketing automation. It’s just a big … at least in my eyes at the time it seemed like this big, enterprisey, clunky, old, really hyper competitive space with a bunch of funny competitors; just not a market I want to get into. I tend to like really tight niche markets where you can just own that thing and you don’t have to … you’re not fighting red water every day with someone else. It’s not a feature race all the time. But it became clear about a year into running Drip … a year, year and a half that that was where the whole space was going. And not building that would have just relegated us to being undifferentiated; everybody just had another major product and by building an automation and building it in a way that was more elegant and … or you know at least I think so, more elegant, easier to use than Infusionsoft and Active Campaigns and some of the other competitors it … we became, that’s how we got on the radar. I mean we were an unfunded marketing automation platform in essence. We didn’t raise any money and we were five people basically in a closet in Fresno, California and we were number 12 on Data Analysis Marketing Automation List. And all the 11 ahead of us had raised … decked a million, some had raised nine figures, I mean it was crazy. Mark: Well, that’s one of the things I find fascinating about your story. When I first saw Drip kind of pop up you had these really large players out there that you knew had significant revenues coming in, significant funding, very large programming teams of developers, how did you guys manage to stay agile like that at such a small footprint of a company but still put out incredible code? What were some of the things … I’m asking you to go back here and kind of think back but [inaudible 00:10:28.3] so what was all those things that you did to be able to compete against these larger players? Rob: Yeah, that’s a really good question because Derek and I … so Derek is my co-founder with Drip and we are both software people. I’ve written code since I was a kid and so had he. And so we built the company. It was very much a product focused company you know a lot of [inaudible 00:10:47.7] tech companies launch and they’re very marketing focused and the software is kind of a piece of crap. And then you’ll see them get legacy over the years and eventually they can’t ship features so they ship very very slowly, one or two releases a year. And for a SaaS app that’s just not the way you need to do it. So Derek and I from day one built a very strong foundation. It took six months to get Drip into people’s hands and it really … we could have done it in three months but it would have been shitty code. And so we focused early on of not having a legacy, we took our time to build a really solid foundation architecturally, and then the first three hires that I made were Derek who was a contractor at the time and then became W2 and then eventually got chairs and was retroactively made him a co-founder and then two other developers. So when we were a team of four which was three developers and me and I did everything else. And that allowed us without the legacy; it allowed us to ship really fast. We were super agile. We used to get hub issues and we just … we were, I mean we would hammer out features. We would hammer out an entire integration in less than a day. Because there was one dude who had built … he built 35 integrations for us. And it was just this relentless focus, there were no meetings, there were no … if there was a question we stood up at a white board. It’s a luxury of A. being a small team and B. being in person. And I know if I build a team again it’s going to be really remote but we move way faster because we were in person two to three days a week and then we’re all at our houses the other two or three. And it was just perfect blend of like speed. I mean our velocity it’s funny you call that out because so many people call that out and even [inaudible 00:12:22.5] Leadpages called that out early on and said how are you … you’re like five people, how are you shipping this many features? And we were shipping multiple features a week and it was just getting in there. Our architecture was stable and the developers … also we hired really good developers we focused very much on that; Derek and I being two developers. We were super rigorous and super picky about who we hired and so there’s a lot goes into it and then you know I’m kind of been rambling but it was really this relentless focus on the product comes first and the product is what is we’re going to be really good at. And at the same time and I have some regrets you know of like I think I should have marketed it harder early on. I think I should have hired a marketer that was better than me. I think that you know there were certain things now that I look back that it’s like didn’t we focus on the product a little too much? But I don’t know in the end I think it worked out. Mark: Obviously it worked out. And this is kind of an interesting thing I’ve seen with software companies. I’ve read a book by the founder of Zoosk [inaudible 00:13:16.3] and they talked about their ability to push out code and features rapidly. It would be we’ve come up with that idea in the morning and pushed it out by midafternoon because they were able to do that. What sort of approval process did you guys have in place to be able to ensure that you weren’t just getting all sorts of really conflicting features? Rob: We had … well A. both Derek and I knew every feature that was shipping. And we knew that until we hit … I mean even … so I left Drip about three months ago it was acquired by the Leadpages you know I think it’s kind of the punch line that some people know about that, and even when we were 10 or 12 engineers Derek and I still knew everything we were shipping and so it’s just a product management. To be honest when there’s only three or four developers you can keep it all on your head or on a whiteboard you don’t even need that much process. Now soon as you tip to four or five then you need some type of can ban you know or something and then when you hit … when we hit seven or eight it was like all right we do need a weekly meeting now; 30 minute weekly meeting. But we had no standing meetings, none of that. I mean it was like you’re writing code 100% of the time or you’re talking about writing code. So we also had extensive unit test coverage. We had I think three lines of unit testing code of unit test for every line of production code so it allowed … that allowed us the safety of like pretty sure this is going to break anything because one of these tests would have caught it and then we do a sanity check on the server and push it. We … you know knock on wood we have very few over the five-ish, five and a half year run like production bugs that really did some damage. And we get a little things here and there but we only had maybe two that I can remember. It was like a scheduling issue, it’s like oh crap we forgot to send emails for an hour like that’s a big deal you know and that happened maybe once and there is [inaudible 00:14:58.5] so code quality was high and we focused on that. Mark: So you mostly run your team local to some extent but at some point when you started to grow and before the acquisition with lead pages did you have a remote team? Rob: We did yeah. Yes so there were 10 of us total by the acquisition and there were five of us in Fresno in office. And like I said we came in about two to two and a half days a week to that office and worked from home the other days and that was a great balance of there was enough time to whiteboard, there were enough days, every other day you’re going to see some people and ask questions but then you could go home and get a ton of work done right. And then we have five people who are all over the place really [inaudible 00:15:38.5] guy in Mexico and we had a developer in another part of California and somebody in New York and stuff so it was … it worked out. Mark: So given … you said if you start something again here in the future it will probably be remote even though you’re not really convinced that’s necessarily the better way to go about it; why is that? Why would you choose a remote in the light of the fact that you might think it’s not the best way to go? Rob: Yeah, I think the ideal way is that everybody can meet in a room a day or two a week. As I’ve said that was the best working environment I’ve ever had. I would go remote because it’s just so hard to find the right talent at the right price in any given metro area. It’s like you can go to Silicon Valley and yes there’s a lot of engineers but damn are they expensive. Or you can come to Minneapolis and they’re going to be less expensive but how many ruby developers are actually here and how many are going to leave Target or Best Buy to come work for me? It’s going to be tough. If I’m making a nationwide search or even as I tip tend to go three time zones in either direction, three hours in either direction from where I am; so I’ll go north to south. [inaudible 00:16:40.6] hire in Canada or Mexico Central South America you’re going to just find really people who sometimes live out in the middle of nowhere and if you’re able to work with them remotely then they can ship some really good stuff for you. Mark: Yeah hiring people is always a challenge. I don’t think I’ve ever talked to an entrepreneur and business owner and I’ll throw myself in that ring as well, hiring people has an absolute pain. Do you have any insights that you want to give us right now? Rob: Oh my gosh. We could do all episode on this. Mark: You really could do all episode on this and so we’ll keep it a little bit short because I want to talk a little bit about MicroConf and also more a bit of the history of Drip but this is more for me [inaudible 00:17:19.9]. Rob: Totally, yeah I know some quick tips. One thing that Derek and I did was we hired a lot around personality. We really want … especially when we were small it was like I want to be able to hang around in a room with [inaudible 00:17:36.9] hours a day [inaudible 00:17:38.6] I don’t do that or I’ve worked at don’t do that they really do hire based on skills and talent and as a result we passed over some pretty good developers. But we could just tell they were edgy or they were a little to opinionated or let you know they were just things it was like we were super super careful. So we did hire slow and then our hiring process took a long time. We also presented it for what it was. The job postings were written very … almost like a blog post or like it was very conversational, oh it was more like a sales letter it would start my job descriptions and say it was all you language, it was like you’re an excellent developer the world is your oyster, you can go work at any company you want but here’s why you don’t want to work at an agency because that da da da da da, you know you could go here but come work for us, you can be fully remote you can be … and then I present the benefits. It was very much like either magic or writing a sales letter where you present the you language and then you’re going to present the problem and then what are the solution like come work for us. So as a result we got really high quality candidates and it was a very … I bet I would say look we do not pay, don’t come here if you want to make what you are going to make at a Fortune 500 company. We do not pay these exorbitant developer wages but here’s what you get in exchange, you get the freedom to do this, there are no set working hours, you’re fully remote we’re going to send you a MacBook Pro, we’re going to buy you two Dell monitors, we’re going to … you know just all the stuff that; some developers don’t want that. They just want the maximum paycheck and other developers loved it, there were people who came and said I can’t get this kind of flexibility in work. So having … like what is your differentiator? That’s what we figured out early on and we put it right from the start in the job description of like you … this is either awesome for you or this sounds terrible. And then the last thing on and I’ll stop is one thing that I learned once we went into Leadpages, because our hiring process took a long time. It was 20, 30 hours a week for me at times and once we got to Leadpages there were two in-house recruiters, just full time recruiters who were freaking phenomenal. And I … one thing that I would do if I were to do again is try to find someone like that on an hourly basis and not a contingency recruiter where they charge at 15% of the salary but just find somebody on Upwork or whatever who’s 50 bucks, 75 bucks an hour who I can have … I can train to do all these stuff, or they can train me frankly. Because once we get to Leadpages like they had bat it down. I mean they grew 50 people a year for a few years. So they had that process down and they taught me a ton of things that I wished I had outsourced more of that in essence is what I’m saying. I felt like as a founder I had to do all the hiring. But it turns out as long as I did the last mile and I would thumbs up or thumbs down someone it was plenty good and sort of the funnel was filtered so much for me. You know by the time we worked and we paid and so I was like I shouldn’t have been doing that type of funnel stuff and hiring process. Mark: Yeah, I can tell you, I just went through the process of hiring somebody on for Quiet Light Brokerage and typically with Quiet Light the people that come on and work with us they approach me about coming on as a broker. But we needed some work on the marketing side and so I put out a job application. It’s a full time job and going through and trying to vet these people and you know you want to hire slowly but you’ve got a bunch of other stuff on your to do list. Outsourcing that and if you’re able to do so makes sense. So the tip that you gave as far as writing the job post in terms of you … you’re the second business owner that I’ve talked to recently that has given that tip. I think it’s a phenomenal way to go about it instead of just saying we need this, we need that, we … or you know this is what we need given the benefits that you attract that top talent is a good suggestion. Okay, let’s talk and go back again to Drip here, when did you realize that this was not just like a little project that you were going to have as like a super niche product and really something that could play with some of the big boys? I mean now you guys would be direct competitors with a Mail Chimp and with an AWeber and those guys have had to play catch up to you frankly in some ways or to what you built. So when was that realization? What made you turn and say okay I’m going to go all in on this for a while? Rob: Yeah, it was a very difficult decision and it was a hard one to make as I said because I’ve had a lot of lifestyle businesses and I value my lifestyle very highly. And it was a decision of boy am I going to continue to have a lifestyle business or am I going to scale up like a startup? Do I want to go all in on this? And I was talking with Derek about it too but it was really a turning point for me. So we started doing our early access in mid-2013 and we launched to our launch list in November of 2013, and it took us until August of 2014 to hit product market fit. We were just struggling you know just adding and it was when we added automations, the initial automation there wasn’t even the work for us that are all visual it was just kind of almost like if this [inaudible 00:22:22.1] stuff. That was game changing because we started growing I don’t know 20% month over month. We’re already flailing around a bit until June as we start rolling out missions then it was like all right now we’re going 10%, now we’re going 15%, now we’re going 20% and it was like boy this is becoming a fact. You know this is we have built something that people really want and we at that point we weren’t ahead of … you know Infusionsoft had a visual builder and Active Campaign did too and I don’t know it was Klaviyo I mean there were competitors around. We weren’t ahead of them but we had just done a very elegant job. You know it’s kind of like we had built a really easy to use platform like on Mail Chimp and we added automation to it in a way that really didn’t exist quite in the same way. So that was when it was really towards the latter half year of 2014 it was like man this thing is growing fast and we have to hire lift the staff up like that was the realization. Mark: Was that the point in time when you decided that possibly selling was on your radar? Rob: No selling came on the radar in 2015. And it was we were staffing up and I realized [inaudible 00:23:29.7] Derek and I have a lot of conversations that’s like we can’t hire fast enough. Like we don’t have the money you know. Running Drip was … especially with the staffing and trying to keep up with everyone else it was just an expensive thing. I mean SaaS apps obviously have great margins and we had a great gross margin but our net margin was not very good because I kept hiring. You know it 10 grand of MRR and now I go out and hire another developer every time because I know we have to keep up with all these competitors. So that was when I realized you know we had a need to raise an angel round, like a seat round probably half a million or we may want to think about answering one of these e-mails we’re getting to acquire us. So we got maybe five pretty serious inquiries, we got more than that they were just you know whatever. You get weekly funding offers from a junior rep at a VC firm and every couple of months we get an email of like we’d like to acquire you and about five of them were people who companies or funds who actually had the money to do it. And that was when it was coming all right so what we do, do we take chips off the table you know cash out in essence, have a good outcome for us and the employees or do we push more tips and basically raise funding you know to at a valuation? Because we probably would have raised funding similar to the valuation we’re going to be acquired at and that puts you in for two three four five more years of doing it. So that was a big decision process for us and frankly, I was burning out a bit. I mean I was struggling to run the company. I didn’t delegate or outsource as much as I should have. Next time around I would it a little differently for sure. Mark: So how did you decide Leadpages was going to be the partner that you’re going to work with? You had five serious potential acquirers. Rob: Yeah, Leadpages was just the best strategic fit and I knew the CEO Clay Collins. We kind of ran in overlapping circles. He was in like the Internet marketing space and I was in more of the startup space but we overlapped a bit. He had been on my podcast and stuff so it wasn’t just like oh we have these five suitors and we’re going to pick Leadpages. It was kind of like well let’s kind of follow each of these tracks you know and then we had … and it didn’t all happen at once right it was over the course of maybe 18 months that like these five conversations happened. And so we just kind of followed each of them to the logical extent and the one that made the most sense and just kept coming back up again and again because deals fall apart like this right? Because someone puts a number on a piece of paper and you’re just like yeah that’s nowhere close and then it’s like all right well then we’re out you know. And then two months later you get an email and it’s like hey so we want to rekindle the … and that’s how these things go right. So it took 13 months from the first email when Clay reached out to when the deal closed. And it was really about six, seven months of hard negotiation during that. Mark: Sure yeah and that walking away right? That’s so typical on a lot of these deals especially in a strategic deal, being able to walk away and you know people just set goals and objectives change over that time as well so they can re-evaluate things. What was some of the things that you learned going from a complete startup environment where you’re a super agile small team that you’re building and that kind of hanging on to this year past sort of growth and then being absorbed by a company that had raised tens of millions of dollars and much different sort of environment; what sort of transition was that? Rob: The transition, it was probably one of the best that I’ve heard about. They did a really good job of kind of leaving us alone for three to four months because we just … we were all shell shocked. I was … it was so crazy I mean we [inaudible 00:27:00.2] moved here and then go on [inaudible 00:27:02.5] pick off [inaudible 00:27:03.0] people we were and it was just this culture shock for us. So they made it as good as it could have been I think. They didn’t screw with the product nobody said [inaudible 00:27:11.5] all our people came on board and joined the team. So I feel like the transition went as good as it could have but it was still hard on me and hard on some of the team members because it … we have been just this tiny little team and then you get kind of absorbed into 170 person company. But I mean to Clay’s credit he set it up really well. So I learned a bunch of stuff … the interesting transition, there was a mental transition at a certain point is we’ve gone from basically being kind of cash strapped to having tens of millions of dollars in the bank as you said from the funding they raised. And I just realized we had to think about things totally differently. Like I needed to stop every week checking our AWS bill and trying to turn servers off and adjust things on the weekends. It’s like that was no longer … it was not worth saving $500 a month for all that time. And you have to be cognizant of the money but it’s like 500 bucks a month is just a rounding error. They probably spend that on toilet paper in a month and it’s like focus on some … if I’m going to spend that mental damage do it on something that grows the bottom line or that improves the product. It was things like that and we … when we can finally pay everybody market rate salaries it was so so cool. We had to hire a lot of junior people and train them up [inaudible 00:28:22.5] up so we … it took us a while for people to really hit the ground running. And once we got here and it's like oh man we can pay market rate. We’re able to hire senior engineers for the first time ever and that was another game changer of like the luxury of having someone come in and like come with code three days into their job because the code base is solid and they are super advanced. They’ve been doing it for seven years instead of six months like some of the folks that … who are great developers now but they were just very junior when we hired them. Mark: You have a lot of other projects besides Drip obviously over the years. You’ve had Start Ups for the Rest of Us, you’ve had MicroConf; they were totally cool with you just continuing on with those projects? Rob: Yeah that was the nice part is you know as Clay and I talked through the whole acquisition it was like … I was like Clay here are my deal breakers number one we can’t … I’m not going to fire anybody like I do not want to lay people off and we didn’t. Number two I do not want to screw our customers like please don’t pivot us into some crazy niche or leave the customers behind that we already have, shut the product down you know let’s not do damage to that. And [inaudible 00:29:23.3] deal breakers although I have like a price, oh I want it … I said it kind of needs to be for enough money that I never have to work again. Like that was one of my things and so we figured all that out. Oh and that was … the third one I was like look I do MicroConf and he knew that and I do the podcast and I don’t spend that much time on them. In all honesty like the podcast is about 30, 40 minutes a week and MicroConf typically was off hours and it might be 20 hours aside from when I would go there [inaudible 00:29:54.0] offer and he said yeah that’s good. And I said I do a lot of public speaking too and I said you know I’ll be representing Drip and Leadpages at that point so it’s actually a … perhaps of benefit to the company so it was good. That would’ve been a really … I was going say be tough but I just that would’ve been a deal breaker. I don’t think I would have not stunned the podcast or the conferences it’s just something I’ve done forever you know. Mark: Yeah, let’s talk about MicroConf for a quick … for people that don’t know what is MicroConf? Rob: Yeah MicroConf is a conference that’s run twice a year in Las Vegas and then in Europe and it is a conference for self-funded startups, so bootstrap startups. And we’re not anti-funding. It doesn’t mean that companies that raise funding can’t come because certainly a lot of … 80% of what funded and unfunded companies worry about is the same thing. It’s hiring and it’s marketing and it’s building a good product and then there’s just 20% percent that we just don’t talk much about at MicroConf. And so we get about … we have a Growth Edition which is for businesses that are providing a full time income or more. So it’s a lot of six seven and some eight figure businesses but it’s definitely smaller. Its SaaS focused but we do get e-commerce people we do get Word Press plugins and info marketers and stuff. And that conference the growth one is about 250 people and it sells out every year. And then we have the Starter Edition which is from idea to full time income and that’s at the same time right around the same time in Vegas and then we have of course the Europe edition which is here in a few months in Croatia; it’s in October. And I’m excited to go to Croatia and now we started selling tickets for that a couple weeks ago. So we try to get … we wanted to build a conference that we wanted to attend. Like Mike and I who was my co-host with the conference, it was like I go to these conferences and there’s multi-tracks and there’s the vendor halls and there’s all this bullshit. I really just want to come, I want to meet entrepreneurs. I want the attendees to be top notch. I don’t want it to be the marketing guy, the C level guy from this oracle or it’s like that no that doesn’t help me you know. I want the attendees to almost all be entrepreneurs in a similar space. And then we want to keep it small. They tend to be about 120 to 250 attendees. And then we want to get really good speakers that may not … these are not like the big name speaker who comes up and pumps you up and you know there’s time and place for that but it’s super super tactical and so that’s what we’ve … it’s kind of like if you want tactics and some inspiration come to our conference. If you want just pure inspiration and you just want to get pumped up then go see Tony Robbins or go to the World Domination Summit. It’s just a very very different thing. So that’s my spiel on it. That’s MicroConf.com if folks are interested. Mark: Yeah absolutely and I absolutely love those smaller conferences the 100 to 150 attendees, you know 200 attendees but where it’s really focused again on the people that you get to know from those conferences. I just find that you do get to know people so much better and the partnerships and relationships that come out of that more than pay for any sort of price that you’re going to have to pay. Your location is Croatia, are you kidding? That’s incredible. Rob: Ain’t that awesome? Yeah, I’m stoked. We did it in Barcelona … we did in Prague for two years, Barcelona for two years, and then we did it in Lisbon, Portugal last year, and this year we’re upping the game. It’s going to be a little harder to get to but man we’re stoked because I’ve never been to Croatia. We do try to like put it in places that A. people would want to go to but that we want to go to as well. You know it’s an excuse to visit a cool country. Mark: Yeah absolutely, all right we’re up against a clock here but what does the future hold for you? You left there a few months ago. Rob: Yup. Mark: What are you looking at the doing here in the future? Rob: I don’t know yet. I started writing a book about my experience. I’ve written a couple books about software startups and that kind of stuff. And I started writing another one and then I kind of … I got about 12,000 words in and I was like you know I don’t know that I want to do this right now. It was all about my experience with Drip and everything and it was funny I just kind of petered out. So I don’t know if I’ll come back to that. I don’t have a deep desire to do anything bigger than Drip. I think I’m going to take another few months off and I know something will come up and I’m probably going to acquire something is what’s going to happen. And but I wanted to do something that like it needs to make money for my personality you know like I just I have to that’s how we keep score right? But I kind of want to do something in like … even in the hobby space that I really enjoy. I can’t imagine going back and then doing another SaaS app. It’s just I’ve been there I’ve done that what’s new? Like could it be a just a completely different thing that I really enjoy that it also makes some money but maybe it’s not some big fancy startup that’s acquired. Mark: Well awesome. Well, good luck with all of that and let’s make sure that we stay in touch especially being local to each other here. But let’s make sure that we stay in touch. Thanks so much for joining me. Rob: Absolutely Thanks for having me on Links and Resources: Rob’s Website Startups for the Rest of Us Podcast Zen Founder Podcast Microconf Rob’s blog