Archive for the ‘Consulting’ Category

Q4 2015 Review, Yearly Roundup, Vision for 2016

Posted on January 4th, 2016 in Amazon, Business Development, Cave Tools, Consulting, My Story, Outsourcing, Reflection, Self Improvement | No Comments »

3 Months! Once again it’s been way too long between blog posts. Normally when I go this long without writing, it’s because I’ve gotten way too caught up in the hustle bustle of business and life. However, this time I think it’s just because I have gotten lazy. All of my morning routines have completely broken down, I’m sleeping in most days until after 8am and I’m working significantly less hours than I used to. Part of this is due to me delegating my managerial responsibilities to my new manager so I need to find new things to work on. Most of it is definitely due to experiencing so much success over the holidays. Doing huge sales numbers each day is actually having an inverse effect on my work ethic because the sales are just coming in anyways so why wake up at 6am every day. Either way, I need a reset so I can get on top of my game. With this said, I am utterly amazed at how much progress I’ve actually made in this last quarter. It’s a constant reminder of how important this blog is and how short my memory can be if I don’t take the time to reflect on my accomplishments.

Breaking Up With Jarod

Just like the news, let’s get the bad shit out of the way first so we can end on some high notes. This is one section that I’m actually glad I didn’t write about while I was in the middle of it because I would have just dragged on for pages about all of the ridiculous details of what happened.

As you will recall in one of my previous posts, I decided that after ASM 5 I was going to slowly pull away from Jarod. Keep the relationship intact, but no longer work with him because of differences in core values. In September/October, ASM decided to launch again for the 6th time. After the ASM 5 shenanigans, Jarod and I had both decided that we were no longer going to promote to course anymore.

A few weeks before the course launched, Jarod reached out to me and mentioned that he was not going to publicly promote the course, but he had a few close friends and family that wanted to get in. He asked me if it was cool if he brought them in under our affiliate membership so they could access all of the trainings. I had built all of the training in our membership myself, but I also knew that I had no hand in curating these leads so I didn’t think a 50/50 split on the commission would be fair to Jarod. Instead, I offered to take only a 20% commission split for the privilege of them going through all of my training videos and guides. Jarod agreed with me that 20% was fair compensation and everything was good.

Everything was quite on the home front until the ASM pre-launch videos start. All of the sudden, I’m receiving emails from Jarod from ASM Elite promoting the course. He’s using the email list of a couple thousand people that we created together over the past few launches to promote the course to the public. This is way different than asking a few friends and family because now he is using a shared asset that we both built. I called him up and kindly explained that 20% on friends and family was cool, but if he was planning on a full public promotion using our list and the bonuses that I put together, then I would certainly want to split 50-50 on those new members.

Jarod’s response to me was that he talked things over with his wife and he thought giving me 20% was now too much and that he was going to promote the course using our bonus package. So to recap, Jarod now wanted to use the list we built together to drive traffic to the bonus package I built to sell the course and then dictate how much he wanted to pay me.

Without tooting my own horn too much, Jarod didn’t have the intellectual capacity or the business acumen to create his own trainings to match what I had built, but he needed that level of content to sell the course. As we went back and forth, it became clear that Jarod was making a move to steal my content and use it to sell the course without paying me for it.

I had backups of everything on my computer because I had created it all, so I went into the website and youtube accounts and deleted everything I had personally created. I left all of Jarod’s stuff alone, but made sure that there was no way he could swipe all of my content. I forget the exact time frame of events at this point, but we agreed at this point to split up and leave everything else intact. I was happy that my trainings couldn’t be swiped and for the sake of the members of our group we would keep everything else we co-created available for them.

Jarod planned on starting his own Facebook group and I made a post in our joint group that we would be shutting down on a set date in the future and that everything would be migrating over to Jarod’s new group. We agreed on this together and I fully endorsed everyone moving over to his new group. Everything settled down, but after about a week went by, Jarod must have reconsidered things and he decided to boot me from access to everything and he made a move to take over control of the main facebook group. Lucky for me, I was the one that originally created the facebook group, so I had trump power over him. After he booted me from everything else, I ended up kicking him out of the Facebook group. Even though he once again struck first after we came to an amicable solution, he now resorted to his all too familiar pattern of threatening legal action and trying to trap me in a libel scenario.

At this point I was extremely fed up with all of his bull shit. I normally have much more tact than this, but I decided to make this post in the Facebook group to let everyone know what had been going on:

I’ve removed Jarod from the group. We agreed to have a smooth transition, but then he went ahead and changed all the passwords on me.

There’s a reason why Shane stopped working with Jarod and there’s a reason why I have also stopped working with him.

For me, the decision actually came after the ASM5 launch. As you may remember, we ran into some affiliate policy violations during the ASM5 launch.
We didn’t intentionally break the rules, but it happened and for short periods of time our affiliate account was suspended. In business and in life bad things happen. It’s inevitable. Most rational people realize this. What truly matters at the end of the day is how you handle yourself in the face
of diversity.

Jarod took the short term view of making threats and trying to trap people in potential law suits while I tried my best to settle things like men and have real conversations with people to work things out. Unfortunately, since we were a team, my reputation suffered as a result of his actions. It took me
a while to rebuild my reputation, but I did.

I decided from then on that I wouldn’t be working with Jarod anymore because he didn’t share the same values as I do. We were still completely cool and  there were no burned bridges.

The reason we are in the situation we are in now is because Jarod decided he was going to promote ASM6, use all of the bonuses that I put together, and dictate to me what he was going to pay me.

The fact is, the listing optimization blueprint, the launch formula, outsourcing training, all the operating procedures, The 100K per month business infrastructure, costing spreadsheet, manufacturer batch analysis spreadsheet, product research training, the sales letter, our entire affiliate marketing strategy, and a bunch of other stuff I’m probably forgetting about, were all created by me.

Outside of the software and some very Google-able info about patents, almost the entire bonus package was the product of my mind.

I’m sure he has backups of most of it and will repackage it as his own. I can’t do anything about that and I’m ok with it because business grows and changes over time.
At the end of the day, he’s not capable of creating that level of new training on his own. He still has a full time job and his business is nowhere near as advanced as I’m sure he has led you to believe.

I don’t care about allegiances or any of that stuff. It can only benefit you to join his new group as well if that’s what you want to do. He’s much more hands on than I am anyways.

He wants to build a community that he can sell software services to in the future. I run a physical products business and don’t have any “plans” for what this group will “bring me” in the future. I enjoy all the posts in this group, sharing updates of my own, and watching you guys grow in your businesses.

So I’ve decided to keep this group open.

It’s a shame that things had to end this way between us. I really wish my original plan of slowly pulling away and keeping the relationship in tact would have worked out. Unfortunately even an amicable solution wasn’t in the cards for this one.

Let’s move on to some more rapid fire updates and big wins for the quarter

File Sharing Transferred Over To Sync.com

As our team has grown and we have added more processes in place, so has the amount of data storage we need. My free dropbox account was reaching maximum capacity, so I start researching all of the best enterprise level cloud file sharing solutions. I tested quite a few, but ended up going with Sync.com as our new solution.

Here are a couple of the main features that I really liked:

  • 500gb of storage
  • Synchronizes across all devices
  • Company is based in Canada so it is outside the reach of the NSA
  • HIPPA compliant data privacy and encryption
  • Access control and user levels for who gets to see what

Sync has been an absolutely phenomenal software so far and it was an easy transition for everyone on the team to make. With the extra space and extremely high level of encryption/security, I’ve been able to take the majority of my important data off my laptop and into the sync cloud.

My laptop was backed up by carbonite, but now I have redundancy between both carbonite and sync as well as the ability to access any important files from any computer in the world versus needing my specific laptop. To put things into perspective, we went from using 16.5gb on Dropbox to now using 205.2gb on sync.

Building Out The Foundation For Traffic Data Analytics Company Wide

That sub title is probably a little too flashy for describing data analytics, but essentially that’s what I’ve done.

My problem arose when tracking events across multiple platforms. It’s hard to link up traffic data when you go from an Ad to LeadPages, then Leadpages to Amazon or Email to Amazon and try to accurately attribute conversions and cost per acquisition data. Let alone when you add another wrinkle in there of different ad copy on different platforms, generating the initial traffic. It’s just a mess when you are comparing the analytics on multiple platforms and none of the data matches up.

So I signed up with a software called ClickMeter, that essentially allows you to create tracking links and attribute them to various campaigns. The cool part about these tracking links is that from just the link itself, you can inject retargeting, conversion codes, utm parameters, and a whole bunch of other really cool tricks that can keep all your data from each platform contained in one single analytics area.

So after setting up ClickMeter, I had to go and switch out all of the links everywhere so we could start accurately tracking everything. As of right now, we have 76 tracking links across 10 different campaigns and over the last 30 days they have been clicked on 4,340 times. I didn’t have time to properly manage all of our paid advertising campaigns, so outside of Amazon ppc all paid traffic is now paused. That means across our organic content we are generating 4,340 visitors per month. That’s pretty damn good.

To be clear, I have not yet built the automated reports that will break everything down for me and pull all the data together into a strategic spreadsheet that I can make decisions on. But at least the infrastructure is there so when I have the time to tackle this bear of a project, I can pull it all together.

Here are a list of the current campaigns we have in there:

  • Barbecue Recipe Book: Tracks all traffic specifically coming from our free pdf giveaway of the recipe book as well as our new hardcopy version. Info about the hard copy version is later in this post
  • Bonus Pages: How many people follow the links on the insert cards in our packaging to land on our bonus pages. Can compare this to orders per month per product to figure out the exact conversion rates of our insert cards
  • Email Funnels: All the analytics from the email funnels we have. I’ll go into our new email automations later. This data is going to be invaluable when I give context to what we are doing email wise now.
  • Advertising Channels: As discussed above, will pull the advertising statistics from FB, Pinterest, Youtube, Google Adwords, etc into one analytics dashboard so we can measure effectiveness
  • Iris Isaguirre: All the traffic generated from the 300+ Youtube Videos and overlaying ads we have. Iris has a personal set of links she uses to promote everything so I can track sales and traffic data directly attributable to her
  • Janna Estrada: Janna is our new social media manager. Again, she has her own set of tracking links so I can measure effectiveness of all organic social media traffic.
  • Pinterest: Measures all organic traffic coming into our funnels from Pinterest images we post
  • Review Clubs: We are building our own list of Reviewers by directing them over to us from AMZ Tracker. This is against their TOS obviously, but I have structured it in a way that we have plausible deniability if they catch us so we won’t be shut down. Building a list of $1 reviewers is a huge asset.
  • Vanity Funnel: All traffic from each stage in our vanity funnels. This will make more sense when I review our marketing strategy overview later in the post

As I said, right now we are just accumulating data in here. When I get the chance to tackle the spreadsheet that will crunch this data, I expect to be able to take one look and have the ability to make strategic decisions on every area of our marketing strategy in a few minutes each month.

Cost of Goods Sold Analytics

I mentioned in one of my previous posts about how I now have the ability to see analytics on all of my manufacturing data. This data however was isolated on its own tab in my financial spreadsheet, which meant that I always needed to manually update my COGs on my pricing tab to make sure it was up to date.

The reason it worked this way was because sometimes you may have inventory in stock from 2 different manufacturing batches and I needed to manually update so I could use the most accurate costs. For example, say I purchased 1,000 units at $5 apiece and then purchased 2,000 units at $4 each. My inventory in stock is 2,500 units, so until I sell 500 more units, I need to use the $5 figure in my calculations. Now, all I need to do is flip a switch to say which batch is the active number and it will automatically update over to my pricing models.

This switch removes the human error that occurs with manually updating everything and it makes a huge difference in the ease of calculating pricing strategies. Especially as I add more and more product lines to the mix, this spreadsheet update will give me the ability to quickly scale

Producing a Print Version of The Recipe Book

Over the past few years, I’ve looked into publishing the recipe book as a physical book multiple times. Each time I attempted to tackle the project, I backed down because reformatting the pdf version was such a pain in the ass to do.

Well, I finally took a couple days of dedicated work and made it happen. It took a bunch of time to retype and format everything, but we are now selling the recipe book in physical form as well as a pdf download. As you will see in the marketing strategy overview video, the recipe book is now the most crucial point that all of our marketing efforts revolve around because it funnels traffic into all of our product funnel (highly underutilized asset that will be maximized once I get a dedicated ppc person on board).

I looked at a bunch of books in my library when I was designing the cover graphics and decided that I needed to have testimonials on the back cover to provide credibility for the book. Instead of collecting testimonials from our customers, I decided it would be a cool idea to acknowledge some of the friends and family who have really supported me the most with Cave Tools over the years. On the back, I put testimonials I collected from my Aunt Eileen, Uncle Jack, Matt Budenstein, Aunt Peggy, Tina Ahn, Justin Lee, and Zach Hirsch. As soon as the book was finalized, I sent each of them a free copy of the book as a way of saying thank you for their support.

My favorite part of the entire recipe book publishing process was the idea I had for a dedication page. The way the book laid out on paper originally was that the table of contents was on the right hand side of the book. Usually you start the table of contents on the left side, so I needed one extra page before it so I could push it over to the left.

I started out writing a typical dedication along the lines of thanking my friends and family for all of their support. As I was writing it, it just sounded too canned and insincere. I purchased the rights to these recipes and formatted them in a nicely designed book. This wasn’t really something I poured my heart and soul in to create. So I deleted the entire dedication and decided to have fun with it.

This is what I came up with:

This Recipe Book is dedicated to every steak that’s ever been cooked well done. They didn’t deserve to go out that way. With the recipes in this book I entrust to you great power and great responsibility. May the memories of those poor steak souls live on and guide you towards that perfect medium rare every time you take over the grill. 

This dedication is in line with the whole “Medium Rare” nickname joke and we actually get emails all the time from people about how funny they thought the dedication was!

Building a New Training Resource Center

I’ve posted a lot about the power of my training resource center on this blog before. Up until now, I had always been using Igloo Software to run it on Hyacinth Connect. The only issue with Hyacinth Connect was that nobody but myself knew how to really modify and update procedures on there. As our team keeps growing and the number of processes and procedures keeps growing, it was apparent to me that we were outgrowing the capabilities of Igloo Software.

It took me about a full day to migrate everything over, but I ended up building an entirely new training resource center located at training.mycavetools.com. This new training area runs on WordPress, so every member of our team has the ability to update it without learning new coding skills or anything like that. I’m also running it on the WishList membership plugin, which means that I have full access control to each area of the site so nobody has access to every piece of the puzzle.

With the new wordpress layout, it’s also much more organized and easy to see which procedures are active and which ones are no longer being used in the current strategy.

I also built a team page so everybody can see the roles of each team member. We also centralized our human resources/on boarding procedures here so it is very easy for new team members to get acclimated to their position in the company.

training center

 

Developing a 60-90 Day Perpetual Autoresponder Sequence to Monetize Our List

Building an email list and then never emailing them is something that I would be willing to bet 90% of internet marketers are guilty of. The problem is constantly keeping up with new emails each week. There’s just too much will power involved to do it the right way and be consistent unless you have a dedicated email marketing person on your team.

The idea of building out an entire autoresponder sequence is daunting and in my mind, I thought it would take months to develop. So I just never developed anything. In late September, I decided to sit down and crank it out. To my surprise, it only took about 2 full days of dedicated work to build out.

Here’s how it works:

  1. People primarily enter our list in 1 of 4 ways: Website Purchase, Recipe Book Download, Vanity Funnel Opt In (Product Coupon), or VIP List Opt In
  2. They automatically get tagged so we know what products they have purchased and where the lead originated from
  3. The receive a couple days worth of emails that are relevant to what they signed up for. Ex: A few follow up emails about the product they purchased
  4. After finishing that autoresponder they are sent to our Offers Sequence, which is made up of Offer Packets
    1. Offer Packets: These are short email automation sequences that span about 1 week each. If we are trying to sell the kabob set for instance, the person will receive an initial email earlier in the week with “pre-content” to sell the kabob set. Pre Content is usually a youtube video from our channel that deals with the subject matter. In this case, it’s a purely informational email talking about how delicious kabobs are and an instructional video showing how to cook kabobs. Then, a few days later, they receive the “Sell” email which gives them the opportunity to purchase the kabob set at 20% by going through our Kabob Set Vanity Funnel.
    2. The Offer Packets include product offers and affiliate offers. Using this technique, we actually earned a commission when somebody purchased over $250 of Omaha Steaks through our Affiliate Link.
    3. Each time somebody goes through an Offer Packet, they are tagged so we know exactly what emails and offers they have received
  5. The Offer Sequence is a collection of all of the Offer Packets paired with if/else statements so nobody ever receives the same offers or emails twice. So if somebody came into the list by purchasing the kabob set, they would skip over that offer packet and only see the offer packets and pre content for our other products.
  6. The Offer Sequence currently goes for almost 90 days of 2 emails per week per person. Once somebody finishes the entire sequence, they are sent right back to the beginning. Since everything is tagged, they will skip over all of the old emails they already saw, unless we have added new products to the mix. This ensures that everyone on our email list will at some point be exposed to an offer for every single product line we own as long as they stay on the list.
  7. As mentioned in the Click Meter section above, every single link in this sequence is tracked. Once I build my click meter analytics spreadsheet, I’ll know exactly what offer packets convert the best and can logically position them in the Offer Sequence to make sure we maximize the lifetime value from every single person on our email list.

This entire strategy took only about 2 days to build and it is going to be an invaluable asset to the company that will automatically generate thousands of dollars extra per year and ensure that we are keeping in constant communication and top of mind awareness for all of our customers!

automations

General Marketing Strategy Overview

My core competency is on the marketing side of things, so I have a tendency of gravitating towards adding in new marketing strategies all of the time. As good as it is to have all of this marketing going on, the downside is that it adds complexity to the business. Every time we add new products, everything across the board needs to be updated so it all integrates together properly.

In order to continue scaling the company, I need to standardize and simplify the marketing so we can grow fast. Each time I add new marketing strategies, it creates confusion among the team because they are constantly learning new things. I need my team to all be on the same page so they can act as one cohesive unit. For this reason, I’ve decided that we have plenty of marketing strategies in place and it is a more valuable use of time to start maximizing the results of the current strategies instead of continually adding new layers of complexity.

Once that decision was made, it became essential for me to have a broad overview training that explained our marketing strategy in easy to understand terms. Here it is:

 

New Hires and Role Changes

Janna Estrada

Social Media has always been an area of the business we have been lacking in. Up until now, I could never justify having a social media person on the team. There was just no way that they would generate enough additional profit through social media to even pay for their own salary. With that said, we finally reached the point where it made sense to hire a dedicated social media manager, even if that means she is costing us money each month.

The reason for this is because we have such an outrageously ridiculous amount of content. Over 344 Youtube Videos, Almost 100 blog posts, over 185 review posts on independent blogs, Hundreds of custom product pictures from our customers. All of this content was basically just sitting there after creation without ever getting promoted.

I interviewed about 10 people for the position and Janna was the clear winner. She’s actually the most articulate and intelligent person I have ever hired out of the Philippines. Her core values were in line with what I was looking for and she is a total go getter. During the day she works for a music startup (Focusing on bringing Records back into style) in the Philippines and then she works for me at night.

As good as Janna is, I did make a few mistakes when hiring her. For starters, I was looking for someone in the $4-5 range per hour for salary. On the jobs website, her posted salary was within that range. After I told her she was hired, I sent her a message on Skype asking what her desired salary was. She responded that she wanted $15 per hour. I was incredibly busy, so without double checking her posted salary on the website, I just fired back and said that $15 was outside the range for this job and that I was looking for someone more in the $7-9 range.

Of course she accepted the $9 immediately as it was double what her requested salary was. After this all went down, I double checked my notes and couldn’t believe that I just hired her at twice the amount I originally intended to pay her. Writing this down is making me feel even dumber for messing up like this, but I guess I was just juggling too many things at once and she caught me in a moment of vulnerability.

Anyways, the next day I followed up with her and mentioned the price discrepancy. Her requested salary on the website I hired her from was in Monthly numbers, so she said she was confused and thought the amount was in weekly numbers, which is why she wanted such a high hourly rate. I’m a man of my word, so I told her I would still pay her $9 per hour since that’s what I agreed to. However, I made it clear that at $9 per hour she was going to be compared to her American counterparts and that we were going to set a very high bar for her to make her earn that salary.

Typically around $5 per hour is a very nice wage in the Philippines, so at $9 per hour on a part time job at nights, Janna is killing it right now.

Janna has been on board for almost 2 months now and she is doing an absolutely fantastic job managing our social media. To the point where I don’t think I could get an American to do this good of a job even at $30 per hour. She posts the perfect mix of funny stuff, articles, promotional stuff, etc.

I also went out and purchased a seasoned Reddit Account for her to use from some dude in Bangladesh. Last year during Christmas time, somebody posted a Cave Tools link on Reddit and it drove over 15,000 visitors to our website. The traffic potential from Reddit is enormous. The problem though is that Reddit users are crazy and will turn on you in a second if they think you are trying to promote your own stuff on the site.

The seasoned account we are using has been around for over 3 years and has a bunch of “Karma” on it. Karma is essentially like the internal grading system on Reddit to determine how authoritative you are.  By using a seasoned account, we are able to show a history of activity on Reddit of non promotional posts so whenever somebody checks us out we look like a regular user instead of a new account promoting the same company over and over again.

Purchasing and using a seasoned account can be tricky. To make it work, I purchased a dedicated IP address out of Seattle that is used every time we log into the account. That way when Janna logs in from the Philippines, it looks like she is logging in from the same computer in Seattle every time.

Within 48 hours of purchasing the seasoned account from the Bangladesh guy, the account we received was immediately banned from Reddit. They have advanced algorithms to detect these types of things and I’m pretty sure the only thing we messed up on was copy and pasting the username and password during the transfer instead of manually typing it in. That’s how sensitive the process is to get the account under our control. Luckily for me, the guy I purchased the account from replaced it with a new account for free. So far the new account is going well.

Each day Janna logs in to the account and posts random comments in various sub forums and shares links to funny stuff like Cat Pictures. This type of activity helps generate a lot of Karma for us and keeps the ratio of postings looking natural so when we do post our own stuff it looks like just another find on the internet.

Here’s the list of current tasks that Janna does on a daily and weekly basis:

Pinterest:

  • Pin Sources: Amazon Customer Pictures, Blogger Reviews, Articles around the Internet, Original Pictures in Social Media Dropbox folder
  • Pin all images from blogger reviews and optimize with CTA Links
  • Invite Bloggers to collaborate on boards
  • Set up alliance jobs for all blogger pins
  • Pin images from other websites to our general boards (Use AllTop to find articles)
  • Search by Hashtag and follow people who are posting
  • Invite new followers to become contributors to our general boards
  • RePin images from top trending hashtags and optimize description with keywords and CTA Links

Facebook:

  • Respond to any messages sent to us
  • Post in open communities using Cave Tools page as profile
  • Comment on and engage with anybody who took an action on one of our posts
  • Use facebook as Cave Tools and like the pages of each blogger. Use their email address or website name to find them
  • Post in the I Love Barbecue page to help share some of our content

Twitter:

  • Search based on hashtags and follow people
  • Retweet and like posts from the top hashtags
  • Research automation robot to assist with these tasks
  • Follow all new bloggers

Instagram:

Reddit:

  • We will purchase a seasoned account for you to use and assign a specific IP address to use each time you log in
  • Daily activity of 10 minutes per account of regular reddit voting and posting in sub forums
  • Never interact from one profile to another so they do not get linked in any way
  • Once per month per profile mix in one of our links to good content. Good content is engaging so we are talking about videos, blogger reviews (potentially), images (on our site or maybe pinterest), blog posts. Not using Reddit to send people into the product or recipe book funnels because that is obviously sales and the post will get deleted

 

  • Each Friday create the content calendar for what will be posted on each account and when for the next week. Use Hootsuite for facebook and twitter. Instagram and Pinterest can be done daily on the fly

 

Jessica Walker

I spoke in a recent blog post about how my friend Jess hired an Online Business Manager (OBM) to essentially be her COO. To continue growing at the rate I want to, I needed to have another thinker on my team that could keep the wheels on the train. So I followed Jess’s advice and went through Tina Forsyth’s OBM community to hire my own.

Hiring for this type of position was something I have never done before. Usually I build out the framework and training for the person and then it is very easy for them to follow my directions. For this position to work, the person needed to build their own job and have free rein to take work off my plate.

Before posting my job listing, I made sure to read through Cameron Herold’s book Double Double. He gave me a free copy at Camp Maverick and it was incredibly valuable because he covers a lot of information on hiring and provides tons of good interviewing questions.

I designed the first interview to be heavy on the values side of things. I knew that whoever I hired was going to have good prior experience and the aptitude to do the job, so I really wanted to make sure they would be a good fit personality wise with me.

I did 7 total first round interviews, each lasting about an hour long. I then chose 3 people to do a 2nd round interview with. The 2nd round interview was set up where I actually let them interview me. I gave them a full hour to ask me as many questions as they wanted about any area of the business and I screen shared to show them all of the different processes and infrastructure we had in place. This was essentially their chance to sell themselves to me and to see where they would jump in and provide value if hired.

After the 2nd round interview, each candidate then had to prepare a proposal and a blueprint for what they would do and where they would provide impact over the first 60 days of working together.

I had a really difficult decision to make because both Jess and Shannon were very good candidates. In my mind they were essentially a tie. Over the weekend before I made my decision I ended up going to Ontario to watch McGill compete in the lacrosse playoffs. I helped scout the opposing teams with Coach Steinwald and prepare the scouting reports that helped McGill win their 2nd national championship!

Instead of going home, I decided to shoot over to Montreal to hang out with Ben and catch up. Ben is killing it these days and recently bought his own studio where they are now producing high quality tv commercials. We dissected each other’s businesses from an outsider’s point of view and really learned a lot from each other.

Ben is currently going through Dan Sullivan’s Strategic Coach program, which goes into detail about analyzing the Kolbe A personality test. Ben analyzed the Kolbe tests for both Jess and Shannon for me and without a doubt said that Jess was going to be the better choice. Both Jess and Shannon had similar Kolbe scores, but he said that Shannon was going to slow me down because her quick start scores were not where he would want for this type of position. Tie broken.

So far Jess has been doing a pretty good job. I’ve limited her to a maximum of 20 hours per month, which means that she doesn’t have a lot of time to do labor type of tasks. At $60 per hour, I only want her being a manager/point person for my team. Each week she does all of the KPI scorecard grading and also holds all of the team meetings with everyone. That way I only need to have 1 meeting per week with her to make sure everything is running smoothly. She’s also been able to build and update our operating procedures which has been very helpful.

As good as she has been, we’re rounding out our 2nd month working together and I’m still not completely sold that she is the right person for the job. In the beginning, I tried to put her in charge of hiring a new PPC person to bring on. Instead of taking control, she created a bunch more work for me by sending me all of the resumes instead of actually interviewing and widdling down the candidate pool. In other areas as well, instead of taking control she was hesitant and ended up making much more work for me. I had a talk with her where I basically told her that she needed to start owning her job instead of asking for permission on everything.

That kind of stuff is expected for the first couple weeks when you are feeling each other out, so I don’t hold it against her. We still don’t have a PPC person on board, so I’m going to make that my project for January. I think my main problem why I’m not sold on Jess is because it’s hard for me to gauge her performance. In a labor position there are key metrics, but for management it’s not like I’m sitting in on the meetings to see how well she is doing.

This week she is taking off for Christmas vacation so I am going to hold all of the team meetings. This will be my first live conversation (outside of chatting in slack) with each of the team members in over a month so it will be interesting to catch up and see how they are doing.

In January I’m going to have a 2016 planning meeting with Jess and follow the structure provided in the book Traction. This meeting is going to set the stage for next year and I’m interested to see what she brings to the table now that she is fully acclimated into how the company runs. In addition to planning out the entire year, we are each going to set our Quarterly Rocks. These are the 3-4 big things that we want to accomplish in Q1.

My goal is to launch 20 products next year, which means I need to do at least 5 per quarter. I also want to hire and onboard a PPC person and build the systems for Jess to effectively manage them. This PPC person is going to play a vital role in achieving my year end goal of building our email subscriber list to over 10,000 people.

For Jess, I want her working primarily on managing the entire team, working with me to build out the SOPs for standardizing our launch procedure, and keeping up on integrating all of the new products into our current systems.

I’m also going to do a full review on her work over November and December and probably have another conversation with her about being more aggressive and assertive. My goal is to mold her into acting and thinking like Cave Tools is her company so when she makes decisions she makes them with conviction.

Marian Concepcion Alba

Marian has been doing an ok job, but she still is not performing at the level I want her to be at. I set her primary KPI at 15 blogger reviews posted per week and she has yet to hit that mark. Right now she is generating around 7 to 8 per week and has yet to receive a monthly bonus. I think 15 reviews might be a little too ambitious of a goal, so I’m going to bring the KPI down to 7 per week so it is more attainable for her.

In addition to blogger reviews, I’m going to add some more metrics for her to hit. One of my goals is to get 1 review posted to Amazon per day per product, so I built a new drip campaign tool that will allow her to give away 1 of every product every day in exchange for a review.

Each week after the meeting, myself or Jess updates the target keyword we are going after for each product and sets it to active or inactive depending on what products we are giving units away for. Marian checks Amazon for the current ranking of the product on that keyword and enters in the current selling price. The screen is frozen so as she scrolls left the other products appear and the proper list of coupon codes is automatically highlighted green so she knows what to grab.

Instead of just giving the product away to the reviewer, we make them do a search and buy first. That means that they actually go to Amazon and search for our main keyword and then buy the product for $1. The search and buy technique has a massive rankings increase because they have to scroll through the pages to find our product. That raises our relevancy for the target keyword. This is what the reviewer prompt looks like:

*Please disclose in your review that you received this product at a discounted price in exchange for an honest review

**Use Coupon Code Immediately upon receiving this email. This promotion ends in 48 hours and your code will become invalid

****Purchase Instructions****

Go to http://www.amazon.com and enter “Target Keyword” in the main search box at the top of the screen. Click Go

Scroll down the page until you see the product picture in the main search results. I just tried it and it showed up on PAGE 1 for me.

If you see the product on the right column of the screen or at the bottom where it says “Sponsored” please DO NOT click on it. That is an advertisement and it will cost us extra money.

Once you find the product you can add it to your cart and checkout like normal using the one time use coupon code provided above.

Please remember that this promotion ends in 48 hours, at which point the code will become invalid. Unfortunately we can not provide an extra coupon code after the promotion expires. If you find yourself in this situation, then don’t worry. You can join our giveaway promotion notifications list so you don’t miss out on the next opportunity http://cavetools.com/PromoReviews

She’s also going to be tapping into Youtube influencers using a service called Content Boulevard so we can start getting video content produced for each product on a regular basis.

Between these 3 jobs, I want her to start consistently hitting her goals so she can get regular bonuses each month and be accountable to our performance based system like everyone else.

Iris Isaguirre

Iris has been doing a fantastic job building out our Youtube channel using Creative Commons cooking videos. We’re now at over 340 videos on our channel, generating over 10,000 views per month, and using Call to Action ads to drive traffic away from Youtube into our product coupon funnels.

Now that we have such a large base of Youtube content, I’ve transitioned Iris over to blogging. Her new goal is to produce 1 blog post per day and embed one of the Youtube videos in each one so we can have all of that same content on our website as well.

I also have her posting weekly on Epicurious and Chowhound so we can start tapping into those audiences and driving traffic. So far this process hasn’t being going super well. I checked up on one of her posts and it had 8 comments on it, all of which were negative because she posted a picture of Pork to go with a Steak recipe. This was something Jess should have caught and fixed but didn’t.

Once she gets the hang of blogging, I plan on scraping a huge list of bbq and cooking websites for her to start reaching out to for guest blog posts. I’ll set her up with her own highrise account so she can manage all of the leads just like Marian does with the Product Review Bloggers.

Product Line Updates

Grill Set:

When we originally designed the Grill Sets, the packaging was over the 18inch mark on the longest side, which classified them as an oversized product. In July, I spoke with Tracy about resizing the tools and the package so we could make them 18 inches maximum and get the product classified as Standard Size units. We placed an order for 3,000 grill sets in July and when they arrived I found out that they were still the 18 inch + size as before. Apparently she spoke with the engineer and decided not to resize them and never told me. This mess up cost me over $11,000 dollar in profit because of the increased shipping fees associated with Oversized Products. This was a huge mess up! I had a conversation with her in July to discuss the importance of communication on these things and made sure that on our next order they absolutely needed to be resized.

In the end, all we had to do was make the spatula 0.5cm shorter and cut out a few cms in the packaging design. We ordered 5,000 grill sets for Christmas and successfully had the product line reclassified as Standard Size. On those 5,000 units we are now going to make an additional $18,750 in profit by making that one little change

Temp and Smoke Magnets:

On my last blog post I talked about the major quality issues we were having with our magnets delaminating and falling apart on people. I came down hard on my US magnet manufacturer and basically told Tina that she better get her shit together or she was done. I’m one of her biggest accounts so I scared the shit out of her. I’m happy to say that she rose to the occasion and the new magnets are fantastic. Instead of having the design laminated to the magnet itself, we now use the same material as car magnets and screen print the design directly onto the magnets so there is no way for it to fall apart.

The new magnets are larger than before and actually cheaper to manufacture as well. Instead of selling the magnets at break even, they are now generating a profit for me because of the reduced cost of goods sold.

Unfortunately we had to abandon the old magnet listings because they were decimated by negative 1 star reviews. However, we have very little competition in that space so the new listings were incredibly easy to rank and we are already building up tons of new 5 star reviews on the new designs.

New BBQ Brush:

This year our grill brush product line was cannibalized by newer better models. Demand dropped significantly and I’m sitting on over 2,000 units of very slow moving grill brushes. This summer we are going to take back control over the grill brush space with our new design.

I took the same new design that everybody else has and tweaked it by making the twisted wires (Not the Bristles) out of Stainless Steel instead of cast iron. The cast iron is cheaper, but it always ends up rusting if people leave it outside. With the new stainless steel wires, I’m going to have the only rust proof design on the market. The original grill brush model was also an oversized product line, so I made sure that this design was Standard Size like the rest of my stuff.

I tested my samples out by leaving one outside under the grill, one completely exposed outside, and one in a tub of water for a couple weeks. The outside models stood up to the weather and the one that sat in water had very minor rusting. For me that’s good enough to make the rust proof claim for standard use.

BBQ Tongs:

In December we launched the Spatula as an individual product line. Now we are also manufacturing the Tongs as individual units that will be available in February. We also did the same thing by selling our kabob skewers in individual 10 packs without the rack. Between the grill sets and the kabob sets, this is an awesome way to create new product lines from already developed products.

Having individual units also goes a long way in reducing the costs of replacement products. In the past if someone received a damaged grill set we would ship out an entire grill set to replace it for them. Now, we can figure out which tool had an issue and just ship that one out to them.

We’re also able to hit more price points with the individual units. If someone doesn’t want to fork out 30 bucks for the whole set, they can buy an individual unit for 11 or 12 bucks.

Grill Light:

When I was in Aruba in March, I talked to a fairly new seller that only sold Grill Lights. With that product alone he was generating over 100K per month during the summer! This summer, we’re going to have our own grill light and it’s the newest model on the market. Just like my grill brush and thermometer were cannibalized last summer, the grill light market is going to experience a similar shake up with these new models.

The grill light is one of those electronic products where it is very difficult to customize and everyone essentially sells the same item under their own brands. Sure, I’ll have the edge in the beginning, but eventually this market will devolve into a price war because there is no differentiation.

To preempt this from happening, I’m designing really high end gift box packaging. All the grill light manufactures sell the lights in a standard color cardboard box. Instead of going with the color box, we are using a Sky & Earth box design and we created a custom foam mold so it looks really classy when you open the box. Here’s an example of what the box will look like:

IMG_19122015_002209

Burger Press:

The burger press market is another market that is filled with patents. There are only a few designs of the standard burger press that can be freely manufactured and they are all inferior to the patented designs.

There’s a lot of money on the table in this market so I really wanted to get in there. I came across this very unique design one day while searching around on Amazon http://www.amazon.com/Shape-Store-Innovative-Freezer-Container/dp/B00XHI1AGA

Nobody sells anything similar to this product and because it’s made out of silicone there are no utility patents out there. I looked up the company and they launched using kickstarter to raise money and they have tons of press pickup because it is truly a unique product.

As a side note, all of their marketing says they source their silicone in the USA and manufacture in Canada. I found their exact manufacturer in China so they are blatantly lying and will most likely get caught and fined very soon for the deception.

Before I found this out, I actually tried sourcing manufacturing in the US. I contacted a bunch of silicone manufacturing plants across the US and was able to receive a quote from one that had the ability to make it for me. To make it in the US, I would have had to hire someone to create the CAD designs for me and then the mold would have cost me upwards of $40,000 with a unit cost in the $10-12 range. Absolutely fucking ridiculous! No wonder American manufacturing is dying.

By going through the manufacturer in China, I was able to get them to product my 3D CAD models and develop the mold for a grand total of $2,480. My unit cost is still in the $10-12 range so we are currently working on redesigning the CAD models to bring it down to a more reasonable price range.

Instead of doing 8 quarter pound burgers, our design is going to make 6 third pound square burgers. Yes, I’m going to be making square burgers like Wendys haha I think it will add another level of uniqueness to the product because you never see square burgers and there are no square burger products out there on the market.

When you make homemade burgers you are supposed to put a thumb print in the middle of the burger so it doesn’t puff up into a ball when you cook it. Our design is going to have little dimples already pre built into the mold to do this for you. This is going to be my most unique product yet and I think if we can get the pricing down to where it needs to be, it will be a major success!

When my manufacturer sent me the original 3D designs, the side of the tray said “Patent Pending.” I did a little research because I knew this wasn’t something I was planning on patenting and I found that if you haven’t yet filed a patent and you are using Patent Pending, then you can be fined up to $500 per unit. So if I made 2,000 units with Patent Pending on them, then my total liability would be up to $1 million dollars! The manufacturer told me that it was ok and all of her clients put Patent Pending on their products even if they haven’t filed for a patent. I told her she was bat shit crazy and all it takes is for one customer to get curious and start looking for my fake patent. We removed patent pending from the design…

 

Meat Claw Shipping Woes

Almost every blog post I have ever written since starting Cave Tools always involves some sort of fucked up shipping incident that costs me tons of money. Why would this post be any different?

Ever since my epic fail on the Meat Claws infomercial and appearance on The View, I’ve had about 15,000 Meat Claws stashed in my parent’s garage. This caused major cashflow problems throughout the year and severely limited my ability to develop new product lines. Sure it wasn’t costing me anything to keep the inventory at my parent’s house, but it was about $40,000 worth of inventory sitting there all year generating no money. My only hope was that I could somehow sell through them all at Christmas Time.

In November I started the process of shipping out all of the boxed so they could be available in the fulfillment centers for sale. Like usual, I shipped the boxes out of my local parcel place. After a couple trips of shipping out 30 to 40 boxes, the employees there started asking me all sorts of personal questions about my business. I’ve known these guys for years and we always joke around with each other and have a great relationship, so it wasn’t super out of the ordinary.

One day as I was leaving, I went to pay for printing about 25 shipping labels and they charged me about $1 per print compared to the usual 5 cents. When I questioned him on the pricing he replied with a sly remark that it’s a business expense I could write off and that of course I could afford it because my business was obviously doing so well. I was really pissed off at his asshole comments, but decided to pay anyways and then never print there again.

Later that week I printed my shipping labels at home and went down to ship out a couple thousand units. He saw that I printed my own labels and made a comment about me not printing there, to which I replied that at $1 per print I couldn’t afford it and the only reason I printed there in the first place was so I could toss them a couple extra bucks each time. I went about my business preparing the boxes and didn’t engage in any conversation with them at all.

As I was preparing the shipment, I overheard him talking to the woman employee in the back under his breath and he said something along the lines of “I’m sure he probably has insurance to cover his inventory anyways.”

I’ve never felt so uncomfortable before in my life when I left. To the point where I recorded an audio file on my phone on the drive home explaining the entire situation because I was certain they were going to steal all my inventory instead of shipping it out. The retail value of that single shipment was probably in the $30,000 range so I was terrified and almost went as far as driving directly to the police station so I could get something on record ahead of time if something happened.

In the end, I decided to calm down and just keep checking the tracking numbers to make sure it all shipped out the next day. It did and nothing ever happened, but I will never go back there again.

Instead of putting myself in that situation again, I ordered a bunch of packing slips from UPS and scheduled a pickup at my parent’s house for the remaining couple 100 boxes. The UPS guy that picked it up was actually my cousin Andy, so it was cool catching up with him and loading the truck together.

I definitely learned a bunch of lessons from this encounter that will stick with me forever. For starters, people treat you way differently when they know or think you have money. Even if you think they you have a good relationship with them, money changes perceptions pretty quickly. Especially when the people you are dealing with are probably earning minimum wage. I’ll also never again put that amount of inventory at risk without my oversight.

Missing the 7 Figure Mark Because of Shipping Screw Ups

I’m going to finish the year at around 930K in revenue between Medium Rare Industries and Hyacinth Marketing. About 870K being generated by MRI/Cave Tools and 55-60K by Hyacinth Marketing. This is a significant improvement over last year. I haven’t looked at all the final numbers yet to compare, but it will be about 400% growth over the past year. As awesome as that is, 7+ figures was easily within my grasp and I screwed it up because of shipping.

After experiencing shipping delays last year around Christmas time, I told myself that this year I would have everything in stock by October at the latest so there was plenty of room for error. In order to get everything in stock by October, I needed to place all of my inventory orders in August. However, I essentially took the entire month of August off this year while I was traveling around in Europe. All I needed to do was sit for about 4 hours to make my projections and place my orders and I would have easily made 7 figures. Instead, I procrastinated and never placed my inventory orders until about the 2nd week of September.

My plan was to launch the 10pc Skewers and Spatulas by the end of October or early November so they could be in full swing by the holiday rush. However, since I delayed on the manufacturing side of things, the skewers never launched until the 3rd week of November and the Spatulas never arrived until the 2nd week of December. The skewers ended up doing alright for the holidays, but the Spatulas missed the mark almost completely.

Normally when I bring inventory in, I send it to an intermediary warehouse in San Francisco and then ship to the fulfillment centers using Amazon’s UPS account. However, since I was late on placing my orders, I decided to ship everything direct from China to Amazon. This was the first time we ever did this before and we ran into a bunch of unforeseen obstacles.

When the skewers arrived, the trucker went to the designated fulfillment center and waited in line for 4 or 5 hours before they could get to the front of the line. When they got there, they were rejected because we never made an appointment. Apparently when you are shipping to the fulfillment centers using your own trucking instead of the Amazon UPS account, you need to make a delivery appointment. Amazon doesn’t mention this anywhere on the shipment creation screen, so there really was no way to plan for it.

The trucker was pissed because he was never able to drop the inventory off and he had to go back to wherever he was dispatched from. While this is going on, my freight forwarder was calling me on my cell phone trying to figure out how to set an appointment. I was somewhere up in the mountains on my way to Montreal so I had no service. I ended up pulling over to a gas station in the middle of some run down little mountain town so I could get wifi and figure everything out. I sat on my laptop in this little gas station convenience store for about an hour going back and forth and trying to get instructions from Amazon on how to set an appointment.

We finally figured it out, but the next available appointment date wasn’t for another 3 or 4 days. That means I had to pay for the 1st full day of the trucker and for a couple days worth of storage until they could drop the inventory off. When they got there on the appointment date, the trucker waited a full 8 hours in line and never made it to the front of the line. He had to turn around and go back again. Luckily, we were able to set another appointment for the next day. This time, the trucker made it to the front of the line, but because of the wait time he arrived about 2 hours after the allotted appointment time. Amazon has a rule that you have to deliver the goods within 1 hour of your appointment time, so they automatically canceled our appointment and once again the trucker was turned away.

At this point, I was furious because all the extra storage and trucking fees were murdering me on my margins. All the trucker needed to do was check in to let them know he was waiting in line and they wouldn’t have canceled the appointment. Finally, on the 4th attempt we were able to deliver the skewers. Even with all of those delays, we were still able to get them in by the 3rd week of November.

Those two were new products, so I wasn’t banking on the additional revenue from them putting me over the 7 figure mark. What really killed me was stocking out of the Smoker Boxes for about 3 weeks over the holidays. Even though I was late on ordering, I still would have had enough time to replenish the inventory if it wasn’t for my freight forwarder completely dropping the ball on me.

We had already gone through all of the issues with delivering the skewers, so we were prepared for the appointments to deliver the smoker boxes. I had been in constant communication with them about the importance of speedy delivery on the Smoker boxes because they were one of my best selling products and I was running low on inventory. Everything was set to be delivered on the Tuesday before Thanksgiving and if all went as planned, I never would have stocked out.

Each month, I get charged a little over a thousand dollars in interest on my loans I took to finance the year. Since I had a bunch of money in my account, I decided to pay off about $10,000 worth of the loans so I could reduce my interest payment. What I didn’t realize, was that my magnet manufacturer sat on their check for a few extra days instead of cashing it right away. Between the loan payment and them finally cashing their check, my account didn’t have enough money in it when my freight forwarder went to cash their check for the smoker box delivery and it bounced.

On Tuesday morning, I woke up to an email from them saying that the check bounced and they immediately canceled my delivery until the money was paid. Within an hour from them sending that email, I wired the money directly into their account. However the damage was done and they never made the delivery on Tuesday. Everybody was off over Thanksgiving and there were no open appointments the week after, so because of that one little mistake, we never got the smoker boxes back in stock until the 2nd or 3rd week of December. This mistake alone probably cost me about 80K in sales.

I was absolutely furious with my freight forwarder! I have been a customer of theirs for over a year and a half and have always paid on time. Yes, it was my fault that I didn’t have enough money in the account for them and the check bounced. But the least you can do is pick up the fucking phone and give me a call. Especially when it was clearly communicated how important this inventory was because we were in the busiest time of the year. They had their money within one hour of sending that email, but because they didn’t take 5 minutes to call me, they cost me about 80 thousand dollars. From a customer service standpoint, that’s absolutely pitiful.

Of course afterwards, they were apologetic and did their best to smooth things over. What else could they do? They totally fucked up. I’ve been through the gamut of shitty freight forwarders so I’m not going to fire them, but that large of a mistake is really difficult to swallow.

Christmas Season Sales Review and Projections mess up

I discussed my Q4 sales projections and methodology in my last blog post. Well…I was way off! Last year my sales inflection point was on October 31, so I expected it to be the same for this year. Instead, the sales inflection never came until around November 18th. That’s 18 extra days of regular sales numbers when I was expecting about 2x to 3x the demand. Those 18 days were incredibly stressful and full of doubt. I had ordered a shit ton of extra inventory and all I could think of was how I was going to get stuck with it all and have to pay a major tax bill that I probably couldn’t afford at the end of the year. I also had a garage full of around 15,000 meat claws that I was sure were never going to sell.

During this time period, I went back and inspected the logic behind my projections. The logic seemed sound at the time, but I realized that it was all based on relative increases in demand instead of fixed increases. For example, I expected grill brush sales to at least double because they doubled the previous year. The problem with that logic is that my average daily sales this year on that product line were higher than the previous year. I don’t remember the exact numbers, but if I went from 10 a day to 20 a day last year, then instead of going from 15 a day to 30 a day this year, I should have projected to go from 15 a day to around 20 per day.

Using fixed numbers would have given me a much more accurate projection of demand than the relative increase. When multiplied across 11 different product lines, the margin of error on my projections was huge. According to my projections, the absolute lowest revenue I should have done was $500,000 between November and December, but I was expecting to realistically do around $600,000 or $700,000.

Next year, I’ll be sure to use a more conservative estimation process by going with fixed demand numbers. Of course, we still did extremely well over the holidays, so I can’t be too upset. My biggest day came on November 26 when we ran 2 lightning deals and did $26,502.11 in one day!

Lightning deals are invitation only by Amazon where they feature your products on the first page of Amazon at a significant discount. I submitted applications for all of my products, but only the Grill Brush and the Grill Sets were included. On November 26, we sold 719 grill brushes at $11.99 and 322 Grill Sets which accounted for about $22,000 of the sales that day.

Selling 719 grill brushes in one day boosted my Best Sellers Ranking up to number 6 in all of PAtio Lawn and Garden!

After Lightning Deal - Grill Brush

Cyber Monday was just a few days later and gave us an additional $16,542.89 in sales to really kick off the holiday season. After Cyber Monday, I really saw our sales skyrocket on a day to day basis and as we got closer to Christmas we strung together multiple 10K plus days and then even a 3 or 4 day period where we were consistently doing over 15K per day. I took screen shots along the way to show the ridiculous progression. I was literally checking my cell phone every hour of the day during the holidays just watching the sales come in.

December 2:

December 10

December 14

December 15

December 16

December 18

December 23

These numbers were all fueled primarily by the fact that the Meat Claws ended up being ranked in the #3 and #4 position for “Gifts for Dad” on Amazon through the month of December. I don’t track the rankings for all the other similar variations like “Gifts for my uncle” or “Gifts for Brother,” but we were up there on the first page for almost all of those as well!

I think the Meat Claws lend themselves as really good gift ideas, but I also promo’d out about 100 units to target “Gifts for Dad” and I jacked up my advertising bids to help them reach those rankings. At one point we were selling over 700 meat claws per day and I had to jack the price up to lower the demand. I went from being terrified that I would even make a dent in my inventory in November, to being afraid of stocking out of the Meat Claws in December! By the end of the year, I was selling the Meat Claws for $19.99 while my competitors were all fighting over sales of essentially the same product at $9.99.

Currently, I’m left with about 550 units to carry me through January and February until my next batch of 10,000 units comes in to cover the summer.

Between November and December this year, we did $426,323.66 in sales across 28,088 units. November and December accounted for about 49% of our yearly total, which came out to be 56,604 units for $871,497.44. If it wasn’t for the shipping delays, I totally could have knocked off the 7 figure mark, but again, with numbers like these there is no room for me to complain. We killed it this year! Last year we did 11,157 units for a total of $203,329.62 in sales. That’s 429% growth in one year!

With the plan I have in place for next year, I’m hoping to hit over 600% growth in 2016. Yes, that’s about $6 million in sales! I’ll talk more on that in a bit, but for now, let’s look at my year over year growth since starting out on my own.

2011 – $1,000: I picked up the Millevoi Bros contract in October and was still working for Simplex Grinnel

2012 – $20,935: I partnered with Ben in Montreal starting in May, but September was our last month working together so the end of the year had no substantial income

2013 – $89,003.89: Living at home and seriously struggling to get the marketing company back on it’s feet. Almost quit and got a job because the majority of this income came towards the end of the year. The beginning of the year was brutal partnering with Wayne trying to get the National Alliance for Student debt Awareness off the ground. Towards the end of the year I started Cave Tools and we did $51,949.65 in sales from May to December with just the grill brush.

2014 – $263,001: First summer where I really put my full effort into Cave Tools. Hyacinth also generated about 60K. With 263K in sales, I still only ended up with a profit of $9,822 that year because I was self funding and everything was getting reinvested into Cave Tools.

2015 – $900,000+: I don’t have my final year end numbers yet

Looking at the numbers this way really puts things into perspective. It wasn’t until mid way 2015 that I really got my feet under myself and could start taking a regular salary. It took me 3 years of serious struggles to lay the groundwork for our success this year. I can remember so many times when I was at the absolute breaking point and ready to throw in the towel, but there always seemed to be one more opportunity on the horizon that if I could just hit, I would be able to sustain myself.

Taking Over Exclusive Amazon Sales Privileges for Amara Baby Food

Bobby’s friend Jess started a company called Amara Baby Food a few years ago after winning a Start Up Chile contest. They have an strong Angel backer and have been doing pretty well on the retail side of things by getting into Whole Food and a bunch of other super markets in the US.

Jess reached out to me for some help in September because they weren’t making any sales online. I didn’t have the time to help her out, so I put together a couple of listing optimization videos for her so she could manage Amazon herself and start making sales. I had already done an hour long consulting call with her the previous year, so I figured that between that call and the new trainings, she could handle it.

Even after all of the free training I gave her, she still wasn’t making sales. The online world was completely new for her, so she didn’t have the ability to really implement things the way they needed to be. In November, Jess came to Philly to have a few meetings with VCs so she could raise more money. We went out to lunch together and she explained to me that even though they were doing well on the retail side, cashflow was extremely tight. It takes a long time to turn inventory in retail and if they didn’t raise more money by the end of the year, they were probably going to go under.

I was in the middle of preparing for my Q4 so I didn’t have any available time to help her out. I tried pushing her off until January, but I took a step back and realized that I had the opportunity to help save her business. If I didn’t do something quick to help her out, her business was going under. As a friend, I would feel horrible if her business failed and instead of helping her out, I spent my weekends drinking in the bar with friends.

I know It’s not my responsibility to help everyone and I definitely need my down time so I can rejuvenate, but if there was a way to make it work I at least wanted to give it a shot. I consulted with one of my Amazon Masterminds and I studied some old material I had from Dan Collins, who primarily does Amazon Consulting for other businesses instead of his own brand.

About a week or two after I met with Jess, I presented a solution to her. The plan was that I would get an exclusive for all Amara sales on Amazon in exchange for 25% of her net payouts. She would be responsible for all financial and inventory matters and all I needed to do was make her products sell.

My presentation was definitely met with resistance because the typical exclusive deal in retail was usually around 5% and that’s for a major brand like Whole Foods. She tried to negotiate, but I stood my ground. Anything less than 25% was not worth it for me because I would be working for cash instead of building my own asset and I used the exact same contract that Dan uses for the 6 or 7 brands he manages, so I knew that was the going rate for this type of work.

There was also a line in the contract that states that if her company is sold, my contract must remain intact in its entirety unless the acquiring company wants to buy me out of the contract. Their goal is to sell to a big company in the next few years, so they didn’t want to be locked into anything that would hurt their chances of selling. I understood where she was coming from, but also explained that if I get her Amazon account up to say 20 or $30,000 per month in sales, then I am building the asset for her that will be largely responsible for them hitting the numbers they need to hit to sell the company.

We each went back and forth and I made some concessions, such as having a trial period where they can cancel the contract if I don’t hit certain numbers in the first few months. We are now set to fully launch tomorrow, January 4th and I’m really looking forward to seeing what I can do for her brand.

To me, this is a win-win situation. They will go from $0 in sales each month to most likely around $10,000 per month within the first few months and continue to grow as I work my magic. For me, the only expense is going to be my time. I will have to front load a lot of time in the beginning, but once they are up and running, my team should be able to handle the majority of the work. If I can get them up to around $10,000 in pay out each month, that’s an extra $2,500 in profit for me every month. Hyacinth Marketing currently does maybe $1,000 in profit per month across multiple clients (I fired a bunch of clients so I could focus on Cave Tools this year), so this one client will make a huge difference for me. At the end of the day, it’s also going to feel great to help them out with their cashflow problems so they can stabilize the business and continue growing their retail side.

Landing Interviews and PR

The other day my buddy Perry reached out to me because they are launching a podcast called www.cashflowstartup.com and he wanted to talk about my success in ecommerce. In the entrepreneurial world there are typically 2 main types of businesses. Venture backed business are the most well known kinds of businesses where you raise a bunch of capital and try to launch something that is disruptive and has a high chance for acquisition. These types of businesses are normally all or nothing. You either hit big or you fail. The other type of business is a cashflow business where you usually bootstrap it and build a company that generates cash and helps you achieve a certain lifestyle. Cave Tools definitely falls under the cash flow category.

In my opinion, most new entrepreneurs should start out with a cash flow business before going the venture backed route because it helps you learn the ropes of business and also helps you achieve a certain level of financial security where you can target a disruptive business idea without worrying about how to pay the bills. I’m actually very amazed that nobody owned the cashflowstartup domain already because I’m sure it gets a ton of organic searches.

The interview went very well and we discussed a lot of the lessons I have learned and advice I would give to new entrepreneurs who are just starting out. Right now they are building up their interviews, so it hasn’t gone public yet, but I expect it to be live in the next few months.

In November somebody also reached out to me from the www.profitwithpassionsummit.com. I was surprised from this phone call because the entire summit is focused on Christian Entrepreneurs and I am not religious at all. Somebody apparently recommended that they interview me for the virtual summit.

I explained to the guy that I wanted to be very clear that I was raised Catholic, but no longer consider myself a Catholic or Christian. I told him that I do however have very strong core values that closely align with Christian values. My answer was either exactly what they were looking for or they were desperate to fill up the speaking spots. Either way, I was in.

The sent me over some sample questions before the interview so I could get an idea of what we would be talking about. It was kind of funny because all the questions were phrased like “As a Christian Entrepreneur…” to basically try to get me to say I was a Christian. I have no intentions of pretending to be somebody I’m not and I clearly told them multiple times that I was not a Christian, so I just ignored the Christian part and responded “As an Entrepreneur…”

The Summit goes live on January 29 to 31 and they have an entire marketing team promoting it, so I’m looking forward to seeing what type of exposure I will get.

Consulting on how to Outsource Properly

Lately a lot of my friends in Maverick Next and Sovereign Academy have been reaching out to me for help on how to outsource properly. I always love helping out my fellow entrepreneurs and I’m flattered that a lot of people view me as an expert in this area. It reminds me how much I learned when partnering with Ben in Montreal and how much I’ve built on that foundation in the last few years. Especially in this past year, my approach to outsourcing has evolved dramatically.

I still have all of my Outsourcing material I put together for ASM Elite, which goes into granular detail about how I hire and manage my team members. In the last 2 months, I’ve sent these videos to my friend Ben to help him with his info marketing business and my friend Isaac to help him with his Amazon business. The videos are great because I can just send it over and then have a quick follow up call to go over any questions they may have. I also did a hour long consulting call with my friend Nesh in Australia to help him integrate some VA’s into his business which is a meal service for people on the Paleo diet.

Final Year End Review

2015 was easily the most successful, fulfilling, adventurous, and fun year of my life so far. In the beginning of the year I was still living at home. My business was growing, but financially I was struggling to make ends meet. I remember telling myself in the beginning of the year that this had to be my year. After living at home for almost 3 years since returning from Montreal, there was no way I was going to continue being a dependent “Struggling Entrepreneur” by the time I turned 26 in October.

My first big decision was to leverage debt to grow the company. Taking on almost $100,000 in debt from the bank was one of the scariest decisions I ever made. That decision was a major game changer for me and set the stage for the success that followed throughout the rest of year.

In February I attended the ASM conference in Vegas. I had recently made about $15,000 in profit from the affiliate launch and planned on using that money to sustain myself so I could finally move out on my own. However, at the event I was offered the opportunity to join a high level Amazon mastermind in Aruba that cost $15,000. Instead of taking the money and moving out, I decided to invest it in myself by going to the mastermind.

That single decision resulted in:

  • Me getting accepted into Maverick Next and building a ton of new relationships with extremely motivated entrepreneurs
  • Getting the chance to meet Ramit Sethi and get his advice on whether or not I should start a new brand in Europe or not
  • Going to Camp Maverick and hanging out with tons of 7 and 8 figure business owners
  • The inspiration for my KPI scorecard system
  • My entire youtube marketing strategy
  • In depth analysis and understanding of my personality type as it relates to business
  • My weekly Amazon mastermind group which keeps me on top of everything going on in the industry
  • My ecommerce mastermind group
  • My scaling to 7 figures mastermind group

 

I took a huge risk by allocating about $40,000 to the meat claws infomercial and it failed miserably. I learned a ton of lessons from that failure and was able to successfully use the other $60,000 or so dollars to launch 8 new product lines throughout the rest of the year. I also built tons of new scalable processes into my business and hired 4 new team members in Marian, Iris, Janna, and Jess.

Instead of becoming tight with money after the $15,000 mastermind, I decided to double down and invest in myself as much as possible this year between masterminds, courses, and voraciously reading new business books. I’m not sure what the exact dollar amount is, but I estimate that I spent close to $25,000 this year on self-improvement. The value I gained from this investment is incomprehensible when you consider that the same dollar amount could barely afford me 1 year of college tuition.

At the same time as I was quadrupling my business, I was also making a point to travel more than I ever have in my life. This year I went to Las Vegas twice (ASM event, Fantasy Draft with College Friends), Chicago (National Housewares Tradeshow), Aruba, Ireland, France, Lithuania (Sovereign Man), Latvia, Estonia, Sweden, and Connecticut (Camp Maverick).

While traveling, I also came to the realization that I finally achieved the geographic and financial independence I have been working towards since starting out on my own. Of course I’m not truly financially independent, but I have more than enough to live the lifestyle I want to live in 2016. To me that’s freedom and it feels incredibly liberating.

Setting my Sights on 2016

This year was an amazing year, but I’m determined to make 2016 even better.

Personal Goals:

  • Move Abroad: I leave tomorrow for a 10 day “Scouting” trip of Panama and might jump over to Medellin in Columbia for a few days as well. Assuming I like Panama, I intend to make it my home base for the next year
  • Become Fluent in a new language: I’m going to apply the same techniques I used to become conversationally proficient in French on Spanish. I’ll also most likely take Spanish classes so I can become completely fluent and work on my accent.
  • Live Without a TV: I really enjoyed not having a television when I lived in Montreal. It forces you to read and get out more. I’ve watched entirely too much TV over the last 3 months so I intend to cut the habit by purposely not having a TV in my new apartment
  • Travel Extensively: Exploring new countries has always been one of my passions. Next year, I intend to hit most of South America and hopefully make a trip to Hong Kong to visit my brother.
  • Meditation: I worked meditation into my daily ritual for a good 3 or 4 months this year before I broke the habit. My meditation practice worked absolute wonders on my mental health and business growth this year. Next year I will make sure I stick with it and meditate daily
  • Body Sculpting: I haven’t been to a gym in well over a year. I do pushups and sit ups daily to keep in shape, but next year will be different. After I move I will make going to the gym a priority and focus on building muscle mass instead of just staying in shape
  • Pick Up a New Hobby: Outside of my lacrosse team, I never truly got involved in the Philadelphia community. I was too busy with my business and probably a little too lazy as well to get my ass off the couch on week nights. I’ll figure out what my hobby is after I move, but right now I am considering at least one of the following: learning salsa, scuba diving, kite surfing, surfing, and possibly bungee jumping in the various destinations I travel to.

Business Goals:

  • This year we launched 8 new products, 2 of which came in December so they don’t really count. Next year my goal is to launch at least 20 new products. If we could quadruple with 6 new products, think of what 20 new products can do.
  • Scale my business from 900K to 5 or 6 million in revenue so by the end of the year I am ready or close to being ready to put Cave Tools up for sale. 5 or 6 million is largely dependent on how well the new products do and how quickly I can get them out. At the very least, I expect to do $3 million.
  • Increase our email list from about 2,000 subscribers to over 10,000 subscribers
  • Maintain a 40-50 hour work schedule with minimal work on weekends
  • Learn as much as I can about investing and start getting skin in the game

Sovereign Academy 3 Month Checkup – Mike O’Donnell

Posted on November 2nd, 2014 in Business Development, Coaching, Consulting, Goal Setting, Lessons, My Story | No Comments »

Over the past 3 years, I’ve gone to quite a few seminars and marketing conferences. I always learn a lot of new techniques, pick up 1 or 2 new key relationships, and come home energized and ready to grow my business. However, this increased drive and energy typically fades after a couple weeks and I return to my “normal” working habits. Granted, my new normal is at a higher level than it was before, but the energy boost and increased drive is what fades away.

This time around was different. I didn’t come away from the Blacksmith camp with a checklist of marketing techniques I wanted to implement. Instead, I came away with some major mindset changes that have allowed me to get out of my own way and really take my business and life to the next level.  I also came away with about 40 new key relationships and a firm support group of other entrepreneurs my age all striving to better their lives on a daily basis. I can’t hold myself accountable to my friends at home. They are in a totally different place in life and have completely different goals than I do.

With the Blacksmith Alumni facebook group, I now have a group of people that I can hold myself accountable to that will help me raise the bar for success and keep my focus on the things that are important in my life. I really want to go back to Lithuania next year. For that to happen, I need to take action and prove to you that I’m worth your investment. I’ve been incredibly busy since returning home and wanted to take this opportunity to share with you everything I have been working on.

Lifestyle Changes and Liberty

One of the first lifestyle changes I made was to commit to reading a minimum of 10 pages per day before I sit down at my computer and start working. I downloaded an app called Habits and placed it on the home screen of my phone so I can see and track my commitments every day. Some of my other habits include working out every morning, getting out of bed by 6am at the latest, and doing daily meditation. The app is great because I see a big red circle on my phone every time I don’t complete a habit I committed to. As J Massey would say, If I want to be a person of integrity, then that starts with living up to my own expectations. If I say I’m going to do something, then I’m going to do it.

When I compared myself to the other Blacksmith members, I would say I was above average in entrepreneurial education, but I had a lot to learn on the liberty side of things. Before the camp, I really didn’t know much about Simon or have a firm understanding of the current international economic situation in the world. When I returned home, I immediately became a member of sovereign man confidential and I started reading The Creature from Jekyll island.

I literally read through all 600+ pages of Jekyll Island in under 2 weeks. I couldn’t put the book down. It completely opened my eyes to everything going on in the United States and the federal reserve and changed my outlook on the world. Between reading Jekyll Island and SMC, I’m continuing to read and expand my knowledge about what’s going on in the world.

Out of all of the mentors, I connected the most with J Massey and became very interested in Real Estate. I read Cash Flow Diaries and subscribed to his podcasts so I could learn more about real estate and make use of my time while driving in the car. I also took a real estate investor I know out to lunch to pick his brain about getting into wholesaling. Then I joined a bunch of local Cashflow 101 meetups and started attending local real estate events so I could build my network and learn from more people.

Overcoming Limiting Beliefs About Money

For me, playing Cashflow with J helped me overcome some self limiting beliefs I held about money. Before the camp, I had been growing my physical products business solely on profits. Whenever anyone asked, I was proud that I never took any investment to grow my business. After hanging out with J, I learned that that was the complete wrong way to look at things and that if I had my systems in place that I should be accepting to money so I could accelerate my growth.

I started sitting down for meetings with my local banks to see what type of financing they could provide for me. I also sat down with my friend Alan who is a mortgage broker. He has connections to tons of investors, so we started working on deals to see how much money I could raise. Just sitting down to have these conversations with everyone was incredibly enlightening for me and I learned a ton.

I found out that the banks wouldn’t give me a business line of credit until I could show a tax return with a minimum of 150K in revenue. My business was on pace to do over 150K in revenue this year already, but last year I only did around 60K so I would have to wait until my tax returns in January if I wanted to go that route.

The investors that Alan introduced me to all wanted equity in my company. For the amount of money I needed, I wasn’t comfortable giving away equity and the interest rates they wanted to charge on short term loans were through the roof. I considered all of my options and ended up taking a loan for $15,000 from my dad. I already owed him about $5,000 so I figured I would put the money into inventory and hopefully be able to pay him back after the holiday season. Once January came along, I could get up to a 150K line of credit from my bank and use it to pay off my debt to my dad. That way I would be solely responsible for all of the money owed.

I used the money from my dad to fund inventory purchases for my current products and also planned to launch a new product before Christmas. With my levels of sales, I should have had enough money set aside for inventory, but I mismanaged my cash on hand. I was tracking everything up to this point on excel spreadsheets and never had a true financial picture of where my company was at any given point.

Mismanaging my cash flow was a big mistake that I couldn’t let happen again. So I met with my accountant and over the next couple weeks I went through the painful process of importing 1,000s of transactions into quickbooks online. Now I have a clear financial picture of what’s going on in my business and can run financial statements and appropriately reserve money for future expenses.

After funding inventory, I wanted to use my excess cash to develop new products that I could launch before the holidays. Timing was tight because it typically takes about 70 days from the start of manufacturing for me to get my products in the warehouses and ready for sale. I ran into a bunch of snags with manufacturers and ended up abandoning the idea of having new products by the holiday season. Having new products would have generated more money, but I didn’t want to rush things and launch a product that didn’t meet my quality standards. Instead, I devoted my efforts towards something I hoped would make me even more money in the short term.

Amazing Selling Machine Launch

In October, the Amazing Selling Machine course reopened for sale to the public. This was the course I went through that helped me learn how to source and manufacture products. I partnered up with Shane and Jarod from my Amazon mastermind group to sell the course as affiliates. I’ve been around the internet marketing industry for years, but affiliate marketing was new to me so I was excited to see what we could do.

The course cost about $3,500 so with each sale we would get a $1,750 commission and split it 3 ways after expenses. None of us had an email list to market to, so we decided that we needed to create an awesome bonus package if we were going to get people to sign up under our group. We started out by researching the bonus packages of all of the top affiliates from last year’s launch and we did our best to match or provide a better bonus where we could.

We tried everything when it came to driving traffic for people to buy the course through our link. We each placed about $1,000 into an account and then used it to pay for facebook ads, twitter ads, craigslist postings throughout the country, a news paper classified ad, and even some plenty of fish (dating website) ads targeted at entrepreneurial type of people. Nothing was working and we were spending a lot of money and time to make this work. By the 2nd video of the launch, it looked like we were only going to make a few sales and barely make our money back. Let alone still having to provide all of the bonuses we offered.

Then, one night as I was working it came to me. Why were we spending so much money trying to drive cold traffic when the other bigger affiliates were just going to poach our sales anyways? What if we flipped everything upside down and only focused our advertising on people that we knew were already interested in the course. Under each sales video in the launch there was a facebook comments feed. Each video literally had 1,000s of comments from people who had watch the videos and engaged with them.

I called a meeting with Shane and Jarod and told them we needed to stop all of our advertising immediately and only focus on the people who engaged via the fb comments. I did a little bit of research and about 5 hours of work later I built a scraper that dropped the profile urls of every commenter into a spreadsheet. We now had a list of about 2,000 unique people we could market to.

If you send a private message to someone on facebook you aren’t friends with, it goes to their “other inbox” and they never see it. However, if you pay about $1, facebook will drop the message in their regular inbox and they are pretty much guaranteed to see it. We now had a $1 cost per acquisition for targeted traffic.

Jarod had a background in creating bots with a software program called uBot. The next day, he created a program that automated the entire process of private messaging everyone on our list and accepting the $1 charge. We split the list into 3 and we each ran the program on the background of our computers and messaged every single person. This automation program saved us probably about 20+ hours of work!

Instead of telling them to go to our website and “check out our bonuses” we decided to send them a message telling them we created a skype channel where they could ask us questions about the course that weren’t answered in the videos. Everyone had questions and our message wasn’t trying to sell them, so we had excellent response rates. Now once we had them on skype we would friend request them and engage in conversations. On the final days before the cart closed, we were able to follow up with phone calls to every non buyer and convert them over to our group.

We went from a potential total failure to ranking #14 on the top affiliates board and selling over $125,000 worth of the course in 7 days! After expenses, we all cleared about $20,000 in profit and will be paid after the 30 day refund period expires at the end of November.

For me, this is a completely life changing amount of money. I’m 25 and still living at home, so all I wanted to do with the money was just pay myself and finally move out again. But that would literally be the worst way to spend the money. Not only would the government take a huge portion in taxes, but I would be ruining my opportunity to put that money towards other cash producing assets such as new inventory and new products.

New Business Opportunities

I’ve discussed it with my dad and when I get paid, I am going to pay myself about $3,000 to keep myself going and make a payment of approx $5,000 towards my loan from him. The rest of the money will be spent towards new products (possibly launching a new brand) and towards a new business I am forming with Shane and Jarod.

There are approximately 5,000 students who are in or have gone through the Amazing Selling Machine course. All of these people and other Amazon sellers need marketing tools to help them promote their products. Our goal is to reverse engineer all of the software out there and start making our own versions and selling monthly memberships to people. We each left money in the shared account and already have a full time programmer working on our new software suite.

Once it is finished we will be giving all of our members who joined under our affiliate group lifetime access. We will then use their word of mouth and also tap into the ASM facebook group and other Amazon groups to get an initial base of users. We will not only be making money off of our new software suite, but we will also build a giant list that we can market to for the next ASM launch!

Becoming an Amazon Coach

Right around the time we were wrapping up the affiliate launch, my mentor Justin Lee gave me a call. I worked for Justin as an unpaid intern for a full year while in college so I could get firsthand experience from an entrepreneur. Justin has played a major role in my success and helping me become the entrepreneur that I am today. After spending some time catching up, Justin told me that he ran into an old real estate buddy who started an Amazon wholesaling business about 5 years ago. They were growing faster than they could keep up with and were looking for some coaches to help them out with their growing student base and he wanted to know if I was interested.

I spoke with his friend Chris Bowser and he ended up flying me up to Boston last week to meet his team. Chris essentially owns 3 businesses in one. They run facebook and radio advertisements in cities throughout North America and drive people to free events where they learn about wholesaling on Amazon. From the events, they sell people on a coaching program and 3 day boot camp to get them up and running. Once the people are trained, they can purchase products directly from Chris’s wholesaling business which uses bulk buying to pass deals on to their students. It’s a very cool business model and I’m excited to learn the wholesaling side after being on the private label side of selling for the past year and a half.

Starting this week, I’m taking on 5 new coaching students and I’m expected to increase that number over the next couple months. They are also going to be flying me out to some of their events. With everything I have going on right now, it’s probably not worth my time to be doing the coaching for the amount of money they are paying me, but I’m very interested to learn this new business model and I think the relationships I build with Chris and his team will be very beneficial for me in the future.

Marketing and Outsourcing

At the same time as all of this is going on, I still have my Marketing agency providing SEO, PPC, and reputation management services. I decided that I would just keep my current clients and stopping trying to get new ones because I would rather focus my time on all of these other amazing opportunities. However, I keep getting phone calls and new referrals coming in from all over the place. This past week I on-boarded 2 new clients and have 1 more on the way. It’s funny how you can go through droughts in business and then all of the sudden everything tends to hit all at once.

Right now I’m working 7 days a week just trying to stay on top of everything, but I’m absolutely loving it. I’m learning a ton and I’m challenging myself every day to work smarter and more efficiently. I’m also building a bigger and better team around myself to handle all of this new business.

Starting Monday morning, my first full time outsourcer will be coming on board. In the past I’ve always done hourly or fixed projects with my outsourcers. Now I’m at the point though where I have the cash flow and work to support someone full time. I’ve created a full online training resource center for Karen with written and video instructions for everything she is going to be doing. In the beginning, I will have her doing blogging, video marketing, press releases, and social media management for Cave Tools. Once she gets comfortable with that, I will start training her on how to take over some client work for my marketing company.

Last Thursday I held my first training webinar for the Blacksmith alumni and went into detail about my entire outsourcing system and management practices. It felt awesome to be able to give back to the group and share my knowledge with them.

Mike O’Donnell Works With Wayne Marquez…Round 2

Posted on May 16th, 2014 in Consulting, Lessons, Reflection | No Comments »

Fool me once…shame on you. Fool me twice…shame on me.

A couple weeks ago I got a call from Wayne. With the exception of a few random conversations, we really hadn’t spoken a ton since we stopped working together.

The fact that he made me chase him around for over a month and kept dodging/avoiding paying me were definitely contributing factors. It’s not like he was paying me a salary or anything either, these were expenses I paid for on my credit card that he said he would reimburse me for. I knew at the time he was in a tough position from a cashflow standpoint, so I figured his actions were a product of circumstance, not personality.

We talked for about 15-20 minutes just catching up on the phone and he seemed like he was back on his feet again. His education company had picked up and he had just returned from Seattle locking down a new school contract. The reason he was calling me was because he was working on putting together a parenting workbook for inner city families in L.A.

Apparently, schools in Los Angelos are required by law to spend 5% of their discretionary budget on parents every year. They normally spend this money on parent teacher nights and food, but 5% usually comes out to about $50,000 per year! Through his conversations with various principles from those schools, they told him that they literally struggle to spend that money every year. If he could come up with a decent parenting workbook, they would give him the contract.

So Wayne went around and pitched a bunch of principles on his parenting workbook idea and in his words, sold the thing before he even made it. He lead his pitch with his absolute best activity for parents and children, tied it in to a personal story, and sold them on the entire workbook based on what would become just 1 page of the entire thing. He’s a hell of a salesman, I’ll give him that.

His pitch/story had to do with a quick activity that helped parents learn a ton about their child. First, you ask the kid to write their name in the middle of a piece of paper. Then, they need to place the names of their friends around their name. The closer the friends name is to their name, the better friends they are. Farther away means they aren’t as close friends. They also have to group friends in clusters based on who they hang out with.

Right away, the parent can get an idea of who the major influencers are on their child and who hangs out with whom. After this is complete, the child has to write 2 things next to each persons name about why they like that person and 1 thing about what they don’t necessarily like about the person. Now, the parent gets to see what their kids are attracted to and what turns them off. This is very powerful information that most parents never know and it only takes about 5-10 minutes to complete.

So Wayne has all these contracts waiting on him now to produce a workbook with about 60 pages worth of these types of activities. The reason he was contacting me was “Because he needed someone he could trust to do a full day of white boarding with him.”  In reality he only had about 10 of these activities pre thought out and he needed me to help him build the rest and take notes as we brainstormed. He offered to pay me $25 bucks an hour if I would help him out.

I had a ton of stuff on my plate with Cave Tools and Hyacinth Marketing and also had 3 interns coming on board within the week that I needed to prepare for. I figured that this would be a good way to rekindle a relationship with an old business partner and also get my creative juices flowing. He seemed to be back on his feet, so I ignored the thought of him screwing around with me like last time.

I assumed that helping him out as a friend meant that this was a personal job, not a business job. Like when you help a friend move out of their apartment and they hand you 40 bucks at the end as a thank you. In retrospect, I definitely should have discussed payment terms with Wayne first, especially knowing the type of person he was.

Wayne’s neighbor had free office space for us to use in New Hope, so we took over for the full day (9 hours). I have to say, outlining and creating a book was a pretty cool experience. We discussed layout, organization, illustrations, and reverse engineered a bunch of competitor books.

We decided to break the book up into the cover, credits and copyright page, introduction page, parent child contract, and then 4 activities per section (Self Awareness, Family, Friends, Education, Health, Money). The back had a corresponding student section for activities that both the parent and child would do and then compare answers.

All of the competitor books pretty much covered these areas, but they just had words on paper. There was very little interaction and the messages were very direct. The goal for this book would be to have less words and more activities. As the parents and children completed the activities, the answers/message would come through indirectly and would be learned because they actually engaged with the book instead of skimmed through it.

It was a good concept, but to be honest I would never do any of the things we put into the book. I mean these were some pretty basic parenting skills that I guess as a white boy from the suburbs I just take for granted that everyone already knows and understands. However, our target audience comes from a completely different background and household. We approached the book with the mindset that if someone did the entire book, as long as they came out with just one good insight, it would be a success. With that perspective in mind, the creative flow of ideas came much easier.

We worked on the book all day with a short lunch break in between. Over lunch, Wayne started talking as usual. Telling me about how he got a 10K commission for introducing his friend to the owner of the restaurant across the street because his friend bought it. Then he starts going on about how his wife has a new job and that he’s also been selling coffee on the side to distributors for extra cash. Now that he was a big coffee connoisseur he had all of these grand plans for launching his own private label coffee brand. He was going to sponsor farmers in South America and had a brilliant plan to use kids to sell the coffee in train stations. Typical Wayne…talk all day about the grand vision and then never take a single ounce of action.

In the afternoon we go back to work and the productivity seriously drops. Wayne is on the phone with his wife texting and he didn’t prepare with ideas for some of the later activities in the book. We were coming up with activities on the fly and wasting tons of time thinking of unique questions to ask. We ended up powering through and finishing up as much as we could before he needed to leave to go coach his daughters softball team at 6:30.

As we’re packing up to leave, he hands me one of the workbooks and tells me to take it home with me to keep working. Of course, I hadn’t agreed to continue working from home. I had a very busy schedule and told him that I could only fit in the 9 hours we did today because I had other responsibilities.

We walk out the door and Wayne starts to get in his car to leave without paying me. I make a comment asking to get paid and he tells me he’ll send me a check in the mail in a few weeks. I’ve already been through this once before with him so I tell him I was expecting to get paid today. His response is that he doesn’t have enough money to pay me. At this point, I’m fuming. He runs his mouth all day about all this money he’s making with schools and coffee and now he can’t afford $225. Bull shit! At this point, I say no I want to be paid in cash. I’m not dealing with him giving me a check and then the check bouncing and me having to chase after him again. I also said I was expecting to get paid personally, not as a business consulting fee. For $25 bucks an hour, there was no way I was paying taxes on top of that. All of our work together is on my computer, so I have all of the leverage.

He’s in a hurry on his way to his daughter’s practice, so he tells me he’ll think of something. He realizes that I have the leverage, so he gives me a call later that night telling me he’ll meet me tomorrow and give me a check. About a half hour before our meeting, he calls me saying he needs me to bring an invoice and a printed copy of the work with me. Now that he’s broken the trust, there’s no way I’m handing over my leverage until I get paid and the check clears.

When we meet, he’s really pissed off that I don’t have the hard copies with me. We get into a small argument and I flat out tell him that I can’t trust him and that I don’t like the way he does business. If you truly can’t afford to pay someone, then you don’t leave that information until the end after they put an entire days worth of work aside for you. He assures me that the check won’t bounce and then I leave to go to another meeting. I then get a whole bunch of texts about how if I have a problem cashing the check to give him a call. This of course further reaffirms that I thought he was going to try and screw me again.

I deposited the check in my citizens bank account instead of finding a bank of America to cash it on the spot. In hindsight, that would have been the smart thing to do, but the thought didn’t even cross my mind. Wayne of course was pissed that I was now making him wait a full day until the check cleared and he went into a total breakdown.

I received about 15 texts from him that night freaking out. He was calling me a liar and doing all sorts of character assassinations. He was even completely making things up as if he was trying to rewrite history through text messages in case this came into a court battle or something. At one point he even threatened to show up at my house because I was depriving him of supporting his family. I only responded a few times to these outrageous allegations, but basically I said I will send it to you once I get paid. The number of texts and phone calls I got form him were absolutely ridiculous.

I sent him everything that Saturday when the check cleared and I haven’t heard from him since. Looking back on this experience, I definitely should have been very clear about how I expected to be paid before we started working together. This way he couldn’t have tried to pull his shit at the last second. I also should have just used my brain and really considered if it was worth it to work with him again. I knew the type of person he was and should have expected something like this to happen. He definitely hasn’t changed. Ironic that the only 2 people to ever fuck me over in business are Wayne and Matt Zinman. Very similar personalities and I met Matt through Wayne. To this day, Matt still hasn’t paid me the $1,500 he owes me and I’ve found out that he has scammed a bunch of other people as well. That’s another story for another day though.

Looking at the bright side, I’m happy that I did work with Wayne because it was a creative new experience and I did learn a lot throughout the day. We got a lot of really good work done together. I’m also happy that I understood the situation enough to not give up my leverage until everything was square between us.