Archive for the ‘Management’ Category

4th Quarter Madness – Michael O’Donnell

Posted on December 22nd, 2014 in Amazon, Banking, Business Development, Cave Tools, Coaching, Goal Setting, Management, Outsourcing, Sales, Shipping, Training | No Comments »

4th Quarter Madness – Michael O’Donnell

I just outlined the topics for this blog post and holy shit a lot has happened since my last post on November 2. Last year I didn’t get to fully experience what a Q4 was for ecommerce because I only had a grill brush and our grill set had just recently launched and had no traction whatsoever. The last month and a half has been absolutely crazy for the Cave Tools business and just for life in general.

The craziness is what I love about being an Entrepreneur though. Whenever you ask somebody “What’s New?” you normally get the standard response of “Same old, same old.” The fact is, when you have a regular job, you pretty much repeat the same things every day and nothing ever changes. I on the other hand don’t know where to start half the time because once I get talking, I could go on for hours. This blog post only covers the last month and a half, but it might be my longest blog post ever.

Books I’m Reading

Before getting into the meat of things, I want to talk about the books I have been reading. I really feel like the books I’m currently reading have a major impact on my thought processes and how that manifests into results for my business.

Recently, I finished the book Cashvertising by Drew Eric Whitman. This book was recommended to me by my good friend Clayton Bradshaw and his description was that the book was his “Bible” when it comes to advertising. I can honestly say this was one of the best marketing books I ever read. It reminded me a lot of Influence by Robert Cialdini, but thinner, more current, and much more direct.

This book has done wonders for me when it comes to writing ad copy and positioning my products and brand. Drew is from the Philadelphia area as well which is pretty cool because he references things in the book that I can relate to. He also used a local ad agency as one of his examples. I had the opportunity to meet the owner of this company last year when we brought him in to speak to the MDM group.

I knew right away that he was legit and I spent a ton of time talking to him and asking about his influencers. He was a big Glazer Kennedy (GKIC) guy back in the day and I could tell when I read through all of his materials. To see this guy used as an example in “The Bible” on advertising about a year later was really awesome.

Currently, I’m about 75% of the way through “Introducing NLP,” a book that was recommended to me by hypnotist and master internet marketing mentor from Sovereign Man in Lithuania, Cliff Mee. I rarely quit on a book once I get started on it. I like to power through even if it’s not a book I am enjoying. The first 30 or so pages of this book were very dry when they were discussing the Neuro side of Neuro Linguistic Programming. However, I powered through that part and the rest of the book has been fantastic. I’m loving the linguistics side of thing and how they break down true meanings behind words and how people say them.

I have no intentions of putting in the time and effort to become an NLP master right now, but the book has been incredibly insightful. From a psychology standpoint, it’s been a wonderful book.

The next book up on my list is Spin Selling by Neil Rackham. I learned a ton from J Massey in Lithuania and his system for sales was very impressive. This book apparently provides the core foundation on how he structures all of his sales calls so I’m really looking forward to it.

After Spin Selling, I have “The Moral Case For Fossil Fuels” written by Alex Epstein. He was a speaker I helped bring in from the Ayn Rand center back was I was up at Penn State. We really hit it off and I’ve done a below average job of keeping in touch with him since. We exchange emails maybe once per year. Anyways, he has been doing an excellent job building the Center for Industrial Progress and is really starting to make a name for himself so I’m looking forward to reading his book. I also have “Confessions of an Economic Hitman” and “Fluent Forever: How to Learn Any Language and Never Forget It” coming up in my queue. Very excited for both of these books as well.

Cave Tools Featured on The View?

Shortly after I posted my 3 month follow-up blog post on November 2, I received an email from an Advertising Agency that works with Television stations. Normally when I receive these types of emails they are spammed out, but they were claiming to be able to get me on some big name TV shows so I responded to see what was up. Before she could disclose any information to me, I had to sign an NDA.

I did a little research on the company and they looked legit. The NDA wasn’t crazy, just pretty much saying I can’t disclose who they were because they were a behind the scenes agency and they don’t want random people contacting them. They prefer to reach out to brands that they have already researched. I returned the signed NDA and then a couple days later we jumped on a phone call.

She didn’t really give me too much information at all. It was more of an on the spot interview about my company, our brand values, what separates us, how much inventory we hold in stock, etc. For not really knowing what to expect on the phone call, I thought I did a really good job. She loved the meat claws in particular, but because they only sell for around $12-13 she said she would want to bundle the claws with the digital thermometer and market them on TV shows geared towards women and moms.

Before she could discuss any further with me, I had to sign more documents. They sent me a blank IRS W9 form that I had to fill out and a 9 page contract with crazy regulations in it. I read through the entire contract a few times and wrote down all of my notes. I also sent the contract to my dad and asked him to do the same. Later that night we compared our notes so we could be absolutely certain of every term in the contract. Basically the contract amounted to if anything got messed up in any way, they would take my first born child haha

Some of the terms in the contract included:

  • They determine the price they sell my products for on the TV show (Basically would be doing a flash sale similar to QVC but on different networks).
  • They won’t pay me until after they have all my inventory and the flash sale is over
  • They can return products with no penalty or charges at my expense
  • I can’t display any logos or anything showing that Cave Tools appeared on certain TV shows (Basically they own all IP related to the promotion)
  • If there are any delays in shipping, I get charged 3% of the total purchase per day late (this was huge considering I needed to front everything and not get paid until the end). In addition, I would get charged a $10 per unit fee that was not delivered on time. When you’re talking 4,000 products, I consider that taking my first born child and destroying my company
  • I needed to up my business liability insurance from $1 million to $2 million dollars. This sounds like a lot, but it would only have cost me about another $200 to up the insurance.
  • When we shipped them the products there were lots of specifications as to what needed to be shown on the outside of each carton. Missing 1 single element would result in multiple other penalties. FBA warehouses would not be able to do this for me, so I would need to place a certain amount of inventory in a storage facility and have them custom prepare my products for shipment to the Warehouses of this Ad Agency.

After reading through all the regulations and with the understanding they would be purchasing 2,000 units of thermometers and 2,000 units of meat claws, we decided we would do it. My only concern was that I wasn’t going to have enough inventory on the back end to support all of the extra promotion and sales.

I returned the signed documents and was asked to provide my Best Price that I would sell to them for. With wholesale, I normally sell at around a 30% ish profit margin. However, with all of the additional risk associated with this contract, I discussed with my dad and we decided to give them pricing that would secure me a 50% profit margin on the sale.

I was worried that my pricing would be too high for them because their model really is to do a flash sale at deeply discounted prices. It also said multiple times throughout the contract that this is not something we should be expecting to make a lot of money on and that it was more of a chance to get mass exposure for the brand. I gave them the pricing anyways and figured that if they rejected we could always negotiate and see where things went from there.

She got back to me and said that my pricing was a little high, but they could still feature me on The View! The only problem I saw with it was that I literally had about 10 business days to get all of the inventory prepared and shipped to their warehouses.

At the time (and still currently) the longshoreman union in Los Angeles was kicking up a lot of shit because they knew it was the holiday season and they had leverage. Even though the average salary is somewhere in the 150-200K range per man, they wanted more money and were randomly stopping work and congesting up the ports to cause a big stink. I had a shipment of Meat Claws that waited at the port for over 12 days before they even unloaded the carton. I also had a shipment of thermometers on the way which should have been in on time, but as of the time I’m writing this now Dec 14, it still has not been unloaded at the port. The ports were also adding an extra $1,000 fee on top of all containers to account for the congestion.

This extra fee by the way was illegal, but they were trying to force it through anyways the bastards! Eventually the lawyers settled the extra fee dispute and they weren’t able to charge the extra fee on containers that had already been waiting at the port. I did however have to spend an extra $450 out of budget as a proportional fee on my thermometers container.

In the end, I had to back away from the opportunity. I asked if we could follow up and do the promotion in February for a Valentine’s Day style promotion, but have not yet heard back. I’ll follow up again with her in January so I have plenty of time to prepare this time around.

I still think the opportunity will be available and I’m happy I didn’t chase the money/exposure because I never would have been able to handle it. We’ll talk about that later on in the post.

Boston Coaching Gig Falls Apart

In November I talked about an opportunity I had to become an ecommerce coach with a wholesale company based up in Boston. At the point, I knew that something had to give because I was going to be taking on more work than I could handle. The payment they were offering me was only $40 per phone call, but the upside was that I’d have the opportunity to do 3 events before the end of the year and make about $2,000 per event.

Shortly after hiring me, Chris went on his honeymoon and was out of the picture. While he was gone, his brother Alex was running the operations of the company. My $40 per half hour phone call really turned out to be per 1 hour phone call. They also had absolutely no structure and I was pretty much learning on the fly.  The students they brought into the program were all very suspicious of the company as well and thought the whole thing was a scam. It wasn’t a scam, but they were just growing too quickly to keep everything running smoothly.

I started out doing the coaching calls and was also putting in a lot of extra effort problem solving and doing non coaching call types of things. Then when it came time to do the first event, I spoke to Adam about my flight and he told me they were trying to cut costs so they wouldn’t be bringing me to the event. I explained how that was a condition of my hire, but he really didn’t give a shit and said Chris wasn’t here so he was making the decision.

Alex also got me on an hour phone call and was trying to get me to show him my entire business model and advertising funnels so he could copy it and create a course on my business model that he could sell to his students. He wanted me to pretty much do all of this for free and was pissed off when I told him I wasn’t going to just turn over my entire business for $40 per hour in coaching calls.

The writing was on the wall for me, so after about 1.5 weeks I told him I wasn’t going to work with them anymore. It’s taken me until yesterday to actually get paid for the coaching calls I did. I’m still getting emails from their students now who they took over $10,000 in fees from and haven’t delivered on any of their promises. When I spoke to Justin about it he agreed with me that it was ridiculous and said he thinks they are the kind of guys that bill first and worry about delivering later. Definitely not stand up guys or the type of people I would have any interest in working for.

I guess I’ll chalk this one up to a learning experience. My biggest motivation for doing the coaching was so I could learn the wholesaling business model. I didn’t even get that out of it. I downloaded all of their material before I quit and when I went through it, it was all pretty much bullshit. Their whole company is really built just on a fantastic sales pitch, but there is no substance behind it when it comes time to teaching what they preach. I feel horrible for all of the suckers they get to sign up for their programs.

Developing Marketing Automation Tools and Partnership

Not a ton to report on the development of our Ecommerce Marketing automation tools. We have all been very busy, but Jarod has been managing our Indian programmer and we have so far completed  2 of the tools. A couple more are on the way still and the website itself is starting to look pretty nice.

I created our product listing blueprint and the product launch guide based on all of the strategies Shane, Jarod, and myself use on a regular basis. They came out really nice and we have added those guides and all of our webinar recordings to the website for our students.

We started talking the other day about how January is the time when we will need to finally turn this thing into a legal business structure and give it a name. Right now everything is on a handshake basis so we definitely need to protect ourselves. There’s also a little bit of tension going on between Shane and Jarod because Jarod and myself have been doing more of the work, Jarod especially. I’m hoping it all blows over because even though Shane isn’t a major asset when it comes to marketing and operations side of things, he has all of the personal connections and relationships we need to get our product into the hands of mass customers with little effort.

I think a lot of the tension also has to do with the fact that Shane and I are making a killing over the Christmas holiday with our Amazon businesses and Jarod’s is lagging behind. In the end, I think it just has to do with the seasonality of our products, but anytime you see your partners making 4 times as much as you, there is going to be the fear of missing out.

Shane’s brother Jason, the founder of ASM, is also in the market to purchase tools from people. Lately it seems like all of the successful people in ASM are creating their own tools. It’s a race to the finish line for who can create the best tools and take them to market the fastest because there is the opportunity of a buy out on the table. It would be really cool if we could get this entire business set up and then cash out only 3 months later. That is actually very likely right now!

Black Friday, Cyber Monday, Christmas Explosion – Tis the Season for Cave Tools

It seems like every time I get some success and start to get ahead of the game I get a bunch of shit dropped on my lap. I think it was the great Sir Isaac Newton who said for every force there is an equal and opposite force. This time around the negative force wasn’t anywhere near equal to the amount of success we had, but we definitely have a lot of shit to deal with as a result of our holiday success. For now though, let’s focus on the positives.

This year I wanted to do things big for the holidays. In September and October I did a lot of research and built a list of big time product review and mommy bloggers that I wanted to review my products. Some of these websites get around 30,000 views a month on regular months of the year and way more during the holidays.

Out of my list of about 50, only about 20 got back to me and said they would do reviews for me. I shipped out free products to every one of them and also requested to be listed in their Holiday Shopping Guides that they put out for their readers every year. One of the ladies got back to me and said she landed a big time advertising spot for free for her blog and wasn’t going to charge me at all. She loved my Meat Claws so she featured the post at the top of her blog. Throughout the entire holidays, her blog was featured as a banner wrap on double decker buses throughout San Diego and Los Angeles and I was the first thing people saw when they went to her website!

From an inventory standpoint, I started preparing back in August and I pretty much doubled all of my inventory for each product. When I ran my projections, I was expecting probably about a 50-80% boost in sales so doubling up would have left me with plenty of extra after the holidays were over. The worst thing I could possibly do was stock out during the biggest shopping month of the year!

Looking back, I probably should have 7 X’d my inventory because sales went absolutely crazy for Black Friday and Cyber Monday and I didn’t even discount my products. After those two days I started scrambling to get more inventory on planes as soon as possible because I knew I was going to stock out at Christmas.

At around the same time, the Port Unions started kicking up a lot of stink in Oakland because they wanted to be paid more. Those guys all make around 180K per year plus benefits, but they knew everybody was trying to get shipments in for the holidays so they had leverage.

They all pretty much just stopped working and allowed the ports to get extremely backlogged. One of my Meat Claw shipments sat on the boat for 2 weeks before they even took the container off and processed the inventory. After they finally processed my boxes, they needed to be shipped to my warehouse in California and then shipped out again to go on to Amazon warehouses, so this delay was major.

The Ports then (illegally) tried to impose a congestion fee of $1,000 on every container because of the backlog. Lawyers got involved and ultimately they weren’t able to charge me for my meat claws because they had already been sitting there waiting before the fee was announced. My thermometer shipment however did get knocked and I ended up paying an extra $450 because of the damn unions.

The thermometer shipment left China in October and as of today (12/21) they still haven’t reached my warehouse in California. That shipment in itself has been an absolute nightmare. Normally I ship the thermometers by air. You need extra documentation and testing that costs about $5,000 per shipment for the batteries to be approved for air shipping. What I do is allow my manufacturer to coordinate the shipment because they send them to Hong Kong first and then to the US and get around this ridiculous fee. What I didn’t know was that I can ship them via ocean with no problem and use my own guys. So my manufacturer coordinated the ocean shipment and about 2 days before they left port I realized they only did the shipment, not delivery to my warehouse or customs clearance or anything else.

Basically the thermometers were just going to be dropped off in Oakland and nobody would know what to do with them. I started scrambling to get the back end shipping figured out and my manufacturer said to simplify things they would just let me use their freight forwarder. So now I’m dealing with a Chinese freight forwarder (Dolphin Logistics) and signing power of attorney and other documents for a company I know nothing about. Dolphin was making me incredibly nervous because they were so unorganized and they kept asking me dumb questions like is my warehouse on a military base? They were probably just checking off boxes on the forms and making sure, but come on!

Instead of paying the Chinese freight forwarder, my manufacturer paid them directly and then refunded me the excess money I sent them (about $1,200). The freight forwarder won’t give me an invoice for this shipment because obviously the manufacturer took their own spread on the deal, but I’m just happy they were able to figure it out for me.

So all of this shit is going on and at the same time the holidays are here and people are buying like crazy. At one point, I was selling over 100 Meat Claws per day! (UPDATE: 12/29/14 reviewing sales reports. Before stocking out I had 3 days in a row of 300+ Meat Claw sales) To offset the demand I was increasing my prices like crazy. My grill set normally sells for around $29 and at one point I had it up over $40 and they were still flying off the shelves. I literally stocked out of everything except my grill brushes and now I won’t be back in stock for at least a couple more weeks.

Sales were skyrocketing overnight. I went from my best ever of around $1,500 in one day to stringing along multiple 6-$7,000 days in a row!

 

November 22 2014

November 22 2014

November 28 2014

November 28 2014

December 2 2014 - 50K

December 2 2014 – 50K

December 9 2014 - 80K

December 9 2014 – 80K

December 11 2014 - 85K

December 11 2014 – 85K

Up until this point I have been completely self funded so there is no way I would have been able to prepare for the holidays the way I actually needed to. Next year I’ll have a line of credit from the bank so I should be in really good shape.  I think I could have probably done a good quarter million dollars in a month if I was fully stocked up. And that’s with only 4 product lines! Next year I’m going to be super aggressive with my bank funding so I’m hoping to have at least 8-10 by that point. For the record…I also received my ASM Affiliate check this month and had Hyacinth Marketing revenue of a couple grand. Can you say first 6 figure month? Boom Baby!

Of course, with every two step forwards I take, I take one big step backwards. We had a customer service nightmare on our hands I ended up over selling the Meat Claws by over 1,000 orders before we realized what was happening and could shut down the listing. We had to cancel all of the orders on Dec 18 and then inform everyone they weren’t getting their products by Christmas time and they weren’t getting them until Jan or Feb now either.

This whole issue was actually Amazon’s fault and they accepted responsibility for it. But at the end of the day, we took the brunt of the hit and people were justifiably extremely pissed off. I had to sit and write a letter to send to everyone explaining the situation. In the span of about 3 days, Caecilia and I probably fielded over 4,000 emails. Just day and night doing email all day long. It was brutal, but the letter helped soften the blow and I don’t think we are going to get a ton of negative press and feedback online as a result. Amazon is set up so you can’t bulk email customers, but Caecilia found an intricate work around to do it so we were at least able to bulk email the letters. She gets paid hourly, so I gave her a bonus of 10 hours worth of money because of the amount of time she saved us!

Sometimes shit just happens that’s out of your control. Here is what I wrote:

Dear Customer,

I’m writing this letter to express how deeply sorry I am that you will not be receiving your Meat Claws order.

Over the past two weeks, both Caecilia and I have been reaching out to provide updates on the delayed shipping situation. We gave you our word that no matter what, we would get your order to you before Christmas.

Today is now December 18th and unfortunately we are spending our day cancelling/refunding orders instead of shipping them out. This is not a situation we are taking lightly. We pride ourselves on going above and beyond with our customer service and always providing fast shipping for our customers. Today we let you down.

For some of you, this letter will seem unnecessary. For many of you, this letter won’t be enough.

I understand that many of you are angry and if I was in your situation I would be to. I’m not writing this letter to point the finger at Amazon or attempt to justify the actions that were taken. There are always 2 sides to every story.

At Cave Tools, we believe in full transparency. For those of you interested in an explanation, I have laid out all of the facts on page 2 of this letter.

They say that somewhere between 20 and 80 percent of customers will do business with a company once and never again. We sincerely hope that you will give us another chance to earn your business in the future.

Next time you shop for Cave Tools on Amazon, use coupon code QQZJQ3VZ at checkout for a 30% off discount. This coupon code will apply to our Grill Brush, BBQ Tools Set, Meat Claws, Digital Thermometer, and our Meat Tenderizing Hammer (available in February).

Caecilia and I will be working around the clock to make sure we answer any and all questions you may have. You can direct your inquiries to orders@mycavetools.com  and we will do our best to answer as soon as possible.

For the next week, I have redirected our customer service phone line to go directly to my cell phone. If you call (267) 282-1009 you can speak with me personally.

 

Sincerely,

Michael “Medium Rare” O’Donnell

Signature for Story

Cave Tools – Owner

How Fulfillment by Amazon Works: Cave Tools (the seller) sends inventory to Amazon warehouses. The warehouses receive the inventory and typically within 48 hours that inventory is available for shipping out to customers. When an order is placed on Amazon, a message is automatically sent to the warehouse and order is shipped to the customer immediately.

Timeline:

  • November 24: We stocked out of Meat Claws
  • November 26: New Meat Claw inventory shipped to Amazon Warehouse. We set the restock date on Amazon to December 8th and started accepting pre-orders with the understanding that all orders would be shipped no later than the 8th
  • December 1: Meat Claws received at Amazon warehouse and expected to be processed within 48 hours. Even with holiday delays, we have plenty of time because we set our ship date to December 8
  • December 3: We receive notification from Amazon that 100 units have been lost. We shipped the Meat Claws in boxes of 40 each, which means they would have had to lose 2.5 boxes. Investigation ensues. There is still plenty of inventory to satisfy our commitments even if they can’t recover the lost units.
  • December 6 – 8: Inventory still showing in “Receiving” status. Phone calls to support every day notifying them of December 8 shipping commitments. We are told that our inventory is being expedited and that it will appear by “The end of the day today”.
  • December 9 – 12: Phone calls every day explaining that we are now late on our orders. Amazon assures us they are accepting responsibility and explains that for some unknown reason their computer system decided to ship all of the inventory to another warehouse across the country.
  • December 13: Amazon support notifies us that our inventory is now expected to be available on December 17 and we will be able to make delivery in time for Christmas
  • December 14-16: Phone calls to support checking on status. No new information
  • December 17: Inventory still showing as 0 units. Support launches another investigation. At 7:30pm we are notified that our new inventory, which was supposed to be reserved for customers like yourself, was actually sold and that is why inventory is showing as 0. Amazon accepts responsibility for the error and support does not know why we were previously told that our inventory would be available by December 17.

 

The news we received yesterday came as a complete shock. How could we possibly have sold the inventory without knowing about it? Why were we continually told that our inventory would be available to ship to customers before Christmas?

 

 

 

There are many unanswered questions right now and we are still reviewing all of the information with Amazon to see how we can get to the bottom of this. More importantly, how we can avoid something like this happening again to us and other Amazon Sellers in the future.

While I don’t want to speculate about why we were told certain things about expected delivery dates, I can offer my best explanation as to how I think the inventory was sold without our knowledge.

When inventory is received and processed at Amazon warehouses, we are normally notified that the entire shipment is now available for shipping. For example, if we sent 100 units, after they were processed, 100 units would show as available inventory on our dashboard.

According to my conversations with Amazon Support, this didn’t happen. Instead, small spurts of Meat Claws became available at a time. Using the above example of 100 units, this means that throughout the day 10 units would become available, then 5, then 7, etc.

Before our Seller’s dashboard could update the inventory numbers, those incremental units were being sold already. As far as we knew, Amazon support had been telling us that it would all be received on December 17 and our inventory stayed at 0 on the dashboard.

The next logical question would be how did we not notice the additional sales revenue coming in since these units were in fact being sold? Even though the inventory stayed at 0, our Seller’s dashboard would still be reporting the additional income.

Amazon shows us total sales on a day to day basis. However, this sales number is a top level number that includes all of our product lines together. The specific data, such as how many Meat Claw sales were sold on a given day typically lags behind a good 2-3 days.

Since the Meat Claw sales were coming in incrementally and both us and every Amazon support person we spoke with was under the impression that our inventory was still being transferred from one warehouse to another, we were unable to determine what happened until yesterday.

To Amazon’s credit, their support staff spent a good 3 hours yesterday sorting through all of the information before they could come to this conclusion and let us know what happened.

 

As mentioned previously, we are not trying to point fingers or justify the events that happened. We truly believe that at every step of the way both Cave Tools and Amazon took actions and communicated with customers using the best knowledge that was available at the time.

We are sincerely sorry that you did not receive your order and we hope that the above explanation provides some clarity as to why.

We are continuing to review all of these events in detail to see how we can learn and grow as a company. You are a valued customer and we will do our best to earn back your trust.

Trouble in Wire City

At the same time all of this was going on, I was having some serious wire transfer issues.

Chinese New Year is coming up soon and the entire country pretty much shuts down for a full month. Nobody works or does anything. The problem with this is that if you want to stock up for summer time, you need to place your orders before the holiday and hopefully ship out as soon as they get back to work so you can be ready in time.

After what happened to me last summer with my grill brush stock out, I wanted to load up like crazy. For my first time ever, I’m actually filling an entire ocean container with Cave Tools products. It will be a split between 3,000 grill sets and 3,500 grill brushes. So I spoke with Tracy and just like normal I sent my 30% deposit so we could start manufacturing. About 15 hours later Tracy Skype’s me and she’s upset.

She forgot to tell me that they changed their banking information since my last wire and they couldn’t receive the money I sent them, about $5,000 worth. Not only that, but the company name changed, the bank changed, and the account numbers all changed. Can you imagine the look on my banker’s face when I went down to work out the recall?

I’m not sure how true this is, but this is my understanding of the way it works over in China. Non Chinese people are not allowed to own manufacturing facilities. So they get a Chinese guy to own the place and then a bunch of foreign corporations own various percentages of his company. Throughout the year, they change the banking and business names around so they effectively distribute their income to the various accounts of the actually businesses that own the manufacturing facilities. This is obviously very shady and probably not legal from a tax standpoint in China, but that’s on them. I’m just a paying customer 🙂

The recall took about 7 business days and somewhere along the line intermediary banks took about $150 out in fees. I got my money back and then re-wired the full 100% to Tracy and everything worked out. They even started manufacturing before they received the money so I wouldn’t get hit with any delays. It was an honest mistake and Tracy helps me out so much throughout the year anyways so I wasn’t angry with her. I let her save face and we moved on.

While this wire was under investigation, I had another wire I sent for an order of Meat Claws that my manufacturer claimed they never received. The money had left my account already and we double checked that all the banking info was correct. What the fuck!

So now we started a 2nd wire investigation to see what happened and determine if the Chinese bank was trying to screw me. Meanwhile, my manufacturer was storing my products in their warehouse and wouldn’t release for shipping until the balance was paid. They ended up storing my products for almost a month before they finally said I needed to pay and get rid of them because they didn’t have room to store them. Now I had to float another $4,000ish so we could move forward with shipping before I received my original money back.

The Chinese bank kept telling my manufacturer and me that we needed to produce what’s called the swift 103 bank copy. I drove down to my bank 2 days in a row asking for the documentation, but the banker I was working with had no clue what it was. She called the wire department a few times, but wasn’t asking the right questions and I was getting pissed off and arguing with her. Basically as soon as she heard the first no she just told me nobody knew what the swift 103 was. Even though this is a universal bank form for wires.

I was being really short with her so finally she just gave me the phone number to the wire department and said call yourself because nobody knows what you are talking about. I was on the phone with them for less than 7 minutes and I was able to get to a manager that knew what they were talking about and they sent the 103 swift to the Chinese bank.

After the investigation was complete, they said the reason the bank didn’t accept the money was because on the beneficiary company’s name we left out the Co, LTD. at the end. What a fucking joke! Of course the intermediaries took out some fees again along the way, but in the end I got most of my money back and the Claws are on the way now.

New Website Finally Launches

About 5 months ago I purchased cavetools.com so I could eventually move away from mycavetools.com. When it comes to web development, I have worked almost exclusively with WordPress throughout my career. WordPress is great, but the platform itself is meant for informational websites, not ecommerce.

I had a pretty damn good ecommerce set up on WordPress, but it was buggy and often times I was getting calls from customers because they couldn’t place orders. I get around 3,000 visitors per month to my website, but at the end of the day it just wasn’t converting into the sales numbers I would expect. I was literally only doing a couple orders per month using that website even with all of that organic traffic.

For my new website, I wanted to use an ecommerce platform that would convert my visitors into buying customers. I did my research and chose Shopify as the platform I was going to go with. I then went through a bunch of ecommerce training materials and started analyzing big ecommerce websites like Amazon and Zappos to see what kind of marketing features I wanted to pull in to my website so I could maximize conversions.

I then took my whiteboard and drew up the website design and wrote up a word document explaining all of the features on the site.

Home Page

Product Page Design

I then contacted my shopify development programmer in India, Nalini. We discussed all of the features and the intricacies of the design. From a coding standpoint it wasn’t going to be easy to do what I wanted to do. I understood that, but I also wasn’t happy with the development time and final price she gave me.

So I started contacting Shopify development agencies in the U.S. to get a comparable rate and see what they could do. In the end, I found an agency up in New York that’s run by 2 brothers that used to be big time ecommerce guys back in the day before starting their agency. It was only going to cost me about $500 more than using Nalini and I would be able to call them and speak with them since they were in New York. Part of me was also interested in how they handled the entire web dev process since I do a lot of that stuff in my marketing agency.

I got a quote from them and also documented all of our conversations so I could use similar processes on future websites we build in Hyacinth Marketing. He also gave me a 2 week turnaround time which was great.

In the end, the website turned out fantastic and I couldn’t be happier with it. In the last 7 days we’ve already done over $1,000 in sales and I have inquiries for 4 rotisserie grills. They were the toughest thing to sell on my old site and now people want to buy them all the time from me. Here’s a screen shot of the new site:

website home page

The day after we launched the site (Dec 9) I had an awesome idea. I wanted to see if my graphics guy Ibrahim could photoshop in my tongs on a kickass banner image I found. So I brought out my product light box and took like 30 pictures of the tongs at all sorts of angles and sent it over to him. It only took him about an hour’s worth of work, but he did a fantastic job. Far exceeded my expectations on what the result was going to be. I gave him a 3 hour bonus payment on top because I was so happy.

Before After

The new website has all sorts of really cool features such has product zoom when people hover over an image (same as Amazon) and 2-step opt in processes all over the place for lead gen. Instead of normal email capturing like you see for our VIP member’s area In the footer, I have buttons all over the place to give away the free recipe book. When people click on the button, they think they are getting it for free so they mentally commit to it. After they click the button a pop up appears and asks them for their email.

Since they already mentally committed to it, they are way more likely to give their email address. The system I’m using also pre populates their email address in the field if they’ve been cookied on other websites before that also use this system. The result is that they mentally commit and then their email is already typed in so they only have to accept and they get it. Really awesome technology!

I also created semi-automated funnels for retailers who want to carry our products and bloggers that want to do reviews. In the past we did everything on a person by person basis, but now I’m able to build email lists of each type of person. In the future I’ll be able to contact them all at once and provide consistent messaging. I can see us running liquidation deals and things like that for wholesalers when we want to move a lot of inventory at once.

I already received a call from Cigars International because they want to carry our products on their website. Normally wholesalers order like 5-10 units at a time, but they want to purchase an initial order of 500 meat claws. Only problem is I don’t have any left in stock after Christmas, so we’ll follow up in January with them.

On all of our packaging we advertise free recipe book with the purchase. When you offer it for free with the purchase, people get pissed if you then ask them for their email address because technically it’s not free now. So what we do is we insert a business card into every package telling them where on the website they can go to download the book and people don’t have to give their email address.

This insert strategy is great because I can sell products anywhere, including in retail stores, and people still have to come back to our website. On that bonus page, I wanted to devise a special offer that I could give people so I could capture their information. The problem with Amazon is I don’t get people’s email addresses so I can’t build my own customer list. The list is a major asset for the company so I created what’s called a self liquidating offer.

A self liquidating offer is simply an offer that you break even on, but still acquire a customer. I wanted to find something valuable I could give away for extremely cheap that would help me acquire customers and be enticing enough for people to buy.

The two big things people in my industry are always looking for are internal meat temperatures and wood smoking flavors/temps. So I found a guide for each online and told Ibrahim to recreate them exactly but with my branding on it. Then I just went in and changed the suggestions and wording around so we weren’t stealing anything and nobody was going to try and sue for copyright infringement.

I then had both guides turned into magnets. The internal meat temperature guide is for the refrigerator and the meat smoking guide is an outdoor magnet for the grill. The beauty of this all is I’m acquiring customers for break even AND I’m getting branding in their households. Every time they have a party or people over, they see Cave Tools front and center. Brilliant!

I actually thought up this strategy randomly about 6 months ago as I was driving into Philly for a lacrosse game. I was so excited and knew I was going to forget it so I made an audio recording on my phone and just talked for 30 minutes straight about all the details so I had it down. I also spoke with Justin about it and he helped me finalize my strategy. I think originally I was going to give the magnets away for free, but he mentioned that would kill me from a cash flow standpoint and that I’d much rather break even instead of taking a loss.

Just like everything else I do in my business, the magnets had to be scalable. I wasn’t going to be manually shipping all of these things out to each customer. That would take forever! I did a little bit of searching and found a local mailing fulfillment center that could print and ship all of the magnets for me. To keep the costs down on the offer, we only ship them once at the end of the month and use USPS.

I just got all of this together and finalized 2 days ago. Just in time for everyone to open their Christmas presents and go download their recipe books. I also shot a video of me personally thanking every customer for their purchase and put that on the bonus page and also ask for people to leave a review right there on the spot.

This is perfect because we are getting them right when they are the happiest and just opened their product. We are giving them a free recipe book and some other really valuable and cool offers. They can’t possibly be unhappy because we have given them what I like to call a Customer Experience.

bonus

Corporate Structuring and Taxes

We’re coming up on the end of the year. While it’s great that we made a huge chunk of cash here at the end of the year, I need to watch out for the tax man. Since I started Hyacinth Marketing in 2012, I’ve been using my Dad’s accountant Bobby Trauffer for all of my stuff. Bob is good, but at the end of the day I have no relationship with him and he has messed up a couple times on me before.

Over the past 2 years I have been a part of a local business group in Doylestown and had the opportunity to meet and become very close with an awesome accountant. So starting January 1, I’m going to be moving everything over to Doug. I’m also hoping he can help me out with tax planning next year because this year I am screwed.

I decided to reinvest almost all of the money into new inventory and product lines. If I could do this much money with 4 product lines, imagine how much I could do when I add more. So In the past month I’ve spent probably about $60,000 ish between inventory, fulfillment, new product samples, paying off my loan to my dad, etc. Then I come to find out that when you reinvest money in inventory, it doesn’t count as an expense on the books. What that means is that even though I no longer have that money and I did the right thing and invested in my company, it will all be taxed as a profit to the business.

I haven’t gone through everything to prepare for taxes yet, but I’m not looking forward to it. I have a feeling Uncle Sam is going to put me through the ringer.

Currently Hyacinth Marketing is an LLC and is the only business I have. Cave Tools is just a brand name that Hyacinth Marketing owns. Eventually down the road I’d like to sell Cave Tools so I need to have separate books and corporate structures for each company.

I met with my attorney Ron last week and starting January 1, we are going to do a downstream merger and asset purchase. Basically that’s a legal way of saying I’m starting another company and it’s going to buy all the Cave Tools stuff off Hyacinth for free.

We’re also going to change Hyacinth Marketing into an S-Corp so I can pay as little as possible in taxes. The new company is also going to be an S-Corp as well. The way I understand it is that as the owner of an S-Corp I have to pay myself a “Reasonable” salary. Reasonable is not defined by the IRS, but if we made 100K I would probably have to pay myself 50 or something like that to pass through without any flags. That first 50 would be taxable, but then I could do a shareholder distribution for the other 50K and that wouldn’t be taxed. I like the sound of that 🙂

The new company is going to need a name and I don’t want to call it Cave Tools. The reason for that is because people can do an importer record lookup and figure out exactly where I source my products if the name was Cave Tools. Nobody is ever going to know the name of the company because Cave Tools will be the DBA name, so I’ve decided to have fun with it. We’re going to call the new company Medium Rare Industries!

One of the other really cool things with having 2 companies now is that I can bill Cave Tools from Hyacinth Marketing. Basically throughout the year I can allocate expenses to certain books and that way I can keep them both under certain tax brackets.

We’re also going to be adding a 3rd company in there for the partnership with Shane and Jarod, so Doug is definitely going to have his hands full with me for accounting.

Hiring a Full Time Marketing Employee

Remember Karen? The full time marketing girl I hired and was really excited about? Well she strung me along for about a month with excuse after excuse and I finally had to fire her. I tried giving her the benefit of the doubt so many times, but at the end of the day she really set me back.

So now we have Dorothy on board and she is doing awesome so far! She costs more money, but she also has way more experience and she can think for herself on a lot of things which is good. She’s a single mother of two and I have her working my hours, which is her night shift. Hopefully once she is fully trained we can work out a better arrangement for her so she can work regular hours and still have enough communication with me.

Right now I have her trained on Blogging, Press Release writing and Social Media. This week we will be adding in Video Marketing and then some other specific marketing strategies. My plan is to just keep teaching her stuff until I can fill a full 40 work week for her of just straight marketing. After that, I’ll hire another person and cross train them. With all the different strategies I have in my head from over the years, I think I could easily have 2 people working 40 hours a week just on marketing Cave Tools.

The thing I love the most about having Dorothy on board is that it is forcing me to create operating procedures for every aspect of the business. I read and learn so many strategies every year that I never have a chance to implement. When I train Dorothy, I create a detailed word document explaining all of the instructions. Then I shoot a video of me following the instructions to a T and demonstrating the strategy.

I probably have about 20 operating procedures right now. My goal is to build out operating procedures for everything in marketing and then start doing operating procedures for operational tasks as well. This is exactly what I did for Caecilia too. She has a 15 page Customer Service Representative manual with instructions and videos on how to do everything she ever needs to do.

When I’m done, I’ll pretty much just have like a monster book on how to run my company. I’ve talked before about my online resource training center I set up called Hyacinth Connect. Each employee gets their own area they have access to and then inside the area is all of their training materials. Instead of just giving them pdf operating procedures, I added in a wiki so everything is editable.

Whenever the wiki is edited I actually get an email about the updates. So at this point I know for a fact they haven’t been using it the way I want them to. But my goal is to start to train them to update operating procedures and add new operating procedures on their own when they discover new ways of doing things. I’ll work more on this aspect once Dorothy is fully trained and can manage her own work week. Since I get email notifications when the wiki is updated, I plan to start giving small bonuses to incentivize the behavior.

Considering Credit Cards

Up until now, I always just used my bank credit card for the business. However, my dad suggested I start getting airline credit cards and rewards cards. I spend a lot of money every year for business expenses, so I might as well start getting free flights from it all!

Looking into the various cards now, but hoping to rack up some serious points in 2015

Mentoring Matt Greenwood

I met my friend Matt Greenwood while I was in Lithuania. At the time he was developing an app and running a nightlife company in Madrid. The company was still pretty young, but it seemed like they were on the right track.

We were speaking the other day on Skype and Matt told me about how his company went under and he moved back home and had to get a job. Shitty situation, but something almost every entrepreneur has to face. I’ve been speaking with Matt pretty regularly now and helping to mentor and coach him along.

He has a job now, but he’s working on a couple different ventures on the side. I’m teaching him a good bit about outsourcing and really just being there for advice when he needs it. It feels great to be able to give back to people in the Lithuania group.

Meeting up with Tim Murdoch

Tim Murdoch (Head Coach for Montreal Lacrosse Team) was in town the other day and I got to meet up with him and grab a couple beers. His son Max had a lacrosse tournament in Feasterville, which is only about 20 minutes away from me. Unfortunately 2 teams canceled last minute, so the tournament was over after only a couple games. A lot of the parents were pissed off because they traveled from 9 different states to get there and their kids only played 2 games.

We dropped Max off at the hotel and went out for a two hours to catch up on life, business, and lacrosse. I don’t know how much I’ve talked about Tim on here in the past, but he’s a beast when it comes to business. He makes a very good living doing consulting for large companies. He only has about 5 clients and tries to work a maximum of a couple hours per day. The rest of his time he uses to coach lacrosse and enjoy life.

It was about a year ago he told me how he knew the founder of this new company and the guy was giving him an equity stake in it. The company pretty much hired Oxford Linguistics experts and developed an algorithm that aggregates public tweets and based on public sentiment they can very accurately predict what will happen with certain stock prices.

Tim went to Princeton and Harvard and sits on the US and Canada businesses board, so he knows everybody. I pretty much just look at him like The Great Connector. He was telling me how in after only a year already, the company is growing like mad. They expect it to be worth around 600 Million in about 2-3 years. Pretty much everybody in the financial sector is trying to license their software from them. They launched  with Bloomberg as their big whale and now they are almost at the point where they could fully stand on their own without Bloomberg just because everybody wants in now.

This was about 2 weeks ago so my raw facts might be a little off, but out of say 14 of the big wall street investors in the company, Tim has introduced the founder to 6 or 7 of them.

It’s always great speaking with Tim because he gives some outside advice on how I’m doing in my company. Somewhere down the line I can totally see him recommending a big client or important person to me. Definitely one of my best personal relationships that I try to keep warm and check in with every couple of months.

Webinars with Ricky

Last week my friend Ricky from Lithuania reached out to me with an idea. It had been a little while since we last talked, but he wanted to run a partnership idea by me and also catch up on life. We haven’t had a chance to speak yet in detail, but here is a synopsis of what’s going on.

I kind of forget Ricky’s entire background, but I’m pretty sure he worked at Goldman for a while and then quit to start his internet business. He’s a year or two older than me and has lived all over the place. He also hates digital footprints so he has almost no public presence on the internet. In 2015 he finally wants to come out of the shadows and stop being a behind the scenes guy.

Ricky is big on info products and webinars. Between his businesses they did about 2 Million last year in webinar sales. He’s also a workaholic similar to myself but on a different level. If you take everything at face value, it seems like he works about 12 hours a day 7 days a week all year round. I don’t think necessarily because he has to, but he wants to. Just like me, but on a more extreme level, he really enjoys everything he is learning and is passionate about his business.

So anyways, Ricky is a great guy and he was also the one who started our monthly Blacksmith webinar training series where we all teach each other different strategies we know. He tried launching an Amazon business last year in the adult niche (Aka Dildo Store haha) and completely failed and had to liquidate his inventory.

His idea is to partner with me on a webinar series that will teach people more about the physical products business model. He has all the webinar systems in place so he’s thinking that if I put in some up front work with him, he can probably do a good 5 figures with it and I would get a new passive income stream out of it.

If this was anyone else contacting me for this opportunity I probably wouldn’t do it. Ricky is such a smart guy though and in exchange for my knowledge he’ll pretty much teach me the entire ins and outs of the webinar business. Like I said, we haven’t had our full catch up conversation yet, but this could be a really good opportunity moving forward into next year.

I’m also thinking of eventually turning my outsource work into an online course. If this works well, Ricky would be my go to partner to help me launch it. When I’m done, I’ll pretty much have a turnkey content marketing outsourcing course that people can just hand off to outsourcers and blow up their businesses.

Objectives for new year

We’re already at 25 pages of content, so I’ll wrap this up quickly. Some of the work goals I’m setting for next year include:

  • Adding in digital cooking courses that I can upsell to all of my physical products customers. These would be almost 100% margin and my product sales already prequalify everyone so it’s the perfect money making storm. I have Chef Carmen lined up for some conversations in January. I’m not sure if I really need to bring him in on this though or if his credibility would be worth it. In the end, he has the expertise, but I’d be writing the course content anyways. He would just be the guy to cook it all up.
  • This is an entire blog post in itself, but Estonia just released a business E-Residency program where people from anywhere in the world can easily set up an Estonian corporation and take advantage of the tax breaks and be outside the reach of the US Government and US Dollar. I’m just going to say that for now this is on my radar and could be a real possibility a few years down the road
  • 2015 will be the year of email marketing for me. My people received probably 4 or 5 emails all year last year. That’s horrible! With my new expertise in funnels, I plan to start developing really intricate relationship building sequences and use email to generate a lot of additional revenue
  • Money Goals? I have no clue what I want to make in money. I just want to keep driving on because I love what I do and what I’m learning. The 4th quarter this year was fantastic. With the different businesses I have going on and the addition of a bank line of credit this year, I think there is a real chance that I can do $1 million next year. For all I know I can either far undershoot this goal or crush it. Regardless, it’s all about the ride

Mike O’Donnell Gives A Status Update

Posted on February 24th, 2014 in Business Development, Cave Tools, Goal Setting, Lessons, Management, Media Buying, My Story, Outsourcing | No Comments »

I have been horrible at writing lately, so I figured I would at least give a status update on what has been going on in my business life. I would love to write about each of these things in more detail, but I just don’t have the time. Or maybe I am just not prioritizing this blog enough, but it is what it is right now.

What’s Going On:

  • I have my first SEO intern working for me doing about 10-15 hours of work per week. I built a 12 week course on my own platform which will allow me to scale with multiple interns. Course is set up as Major project week 1, redo project week 2 with some tweaks. After every 2 weeks the intern must write reflection post on our interns blog to help solidify their learning. Week 3 starts a new major project and everything builds on itself as they go through the 12 week course. Students get College credit for completing the internship
  • About a month ago, I built my own software (I coded it myself:) which allows me to scrape the business owner name and contact information for companies in pretty much any area that don’t have a website yet. Today I am hiring a data entry person for dirt cheap to run the software all day and upload leads into a CRM system. I also started the process for hiring my first cold caller/ telemarketing employees. They will call all day to sell websites using my script. Anybody that bites will be set up with a phone meeting with me where I will close them. My website developer will take on all new projects and follow my detailed instructions for exactly how we are building every website. Basically I’m productising small business websites and scaling. Once the process is smooth we should be able to increase lead generation at the top of the funnel and increase throughput
  • I have a phone meeting later today with a Famous TV personality in the weight loss niche. She is a B-list celebrity, which for my purposes is perfect. We’ll be discussing building an apparel ecommerce website for her. She has already mentioned promoting Hyacinth Marketing and Cave Tools to her following. I plan to close the deal and over deliver the shit out of her. Then I’ll open the conversation for not just promoting Cave Tools, but becoming the face and celebrity endorsement for the company
  • My 3rd product line, digital cooking thermometers are finishing being manufactured this week and will be thrown on a boat so we can get them live selling. I also have samples on their way for a 4th product line which also sells more year round. Really working hard on leveling out the business to avoid the seasonality trap I got stuck in this winter
  • This week I will be receiving my sample for our first full size Cave Tools grill. It is a combination charcoal grill and vertical rotisserie. Absolutely bad ass and super high quality craftsmenship. Still working on finalizing the details of our agreement, but it will be a private label dropship deal with a welding company in NY to create the grills. The design itself is an award winning design, but they are welders not marketers. Best part is I never have to stock inventory or risk capital to get going. Once orders come in I parse them through and the grill is manufactured for the customer and sent directly to them. I’ll finally have some high ticket items to legitimatize the brand.

Cave Tools Lunchbox1 20140212_211604

  • I’m sending sample products out today to Restaurant Depot, which is like the Sams Club for all restaurant owners. Also working on getting samples out to MrBarBQ as they are very similar to Restaurant Depot, but primarily focus on BBQ niche
  • I did a 1 yr national advertising deal with the National Barbecue Association back in November. I spoke to my rep this past week and they said I am outperforming the industry average by over 200% and I’m getting tons of brand engagement and follow up searches. They were trying to sell me on an even larger advertising package, which sounded pretty fantastic from a value standpoint. However, I declined because I need to expand our product lines more first so once we do kick the advertising into high gear I can have better conversions through cross sales, upsells, etc.
  • I got invited to a major auction in Las Vegas in May that draws over 20,000 retailers and distributors. I’m not personally attending, but I will have trained sales reps selling my products to the attendees. They take a 20% commission, so I don’t intend to make money here. I intend to break even and get as much brand exposure and engagement as possible. I also get a full data list on everyone that showed interest in our products so I can remarket to them afterwards. The list itself is priceless
  • I took a different angle with FB. Instead of working on the Cave Tools brand page, I set up a general interest group called I Love Barbecue. The reason being that people are less likely to like a brand page because they feel the company is making money on them. With a general interest group it is very open and people easily like the page. I am currently getting likes for less than $.05 a piece. We are well over 1,000 likes and the page is getting all sorts of engagement from Barbecue Associations and Enthusiasts posting pictures. When the Thermometers are ready, I will have a huge and captive audience to run a deep discount deal to. The deal will be giving away 50 free products, but it will be viral in the sense that in order to qualify they need to share the deal on facebook to their friends. The additional exposure will be huge. I  know other people who have done this with amazing results.
  • Today I built out a full advertising campaign for a real estate investor. I am getting much much better at media buying and conversions. This REI is part of a group of close to 100 other REIs and he has been talking about me a lot. Best part is that his original campaign was worse than horrible so without even trying I will look like a genius. I also built this guys website and he has already passed on a solid lead for another person that wants something similar.
  • We’re almost finished the completion of the Penn State specific classified ads website. This is a cool project that is basically creating a CraigsList clone but only making it university specific by email address for posters. Once they build a following at PSU they will approach other universities and I’ll be the web dev for each new site.
  • Just finished a website for an author and will be helping him with his book launch when they are done being printed. Interesting book that targets Atheists market and was rejected by over 100 traditional publishers because it was too controversial.
  • Planning a full rebuild of Hyacinth Marketing website to showcase client success stories and focus on Web Dev, Media Buying, High Level Consulting, and SEO only.
  • Planning to migrate Cave Tools over to a more robust ecommerce platform so we can really build out the sales funnel and increase conversions on the site. I’ll write a recap post of the website as it is now before I get rid of it. I learned so much through the development of the current website that I never knew before and I have tons of cool shit going on on the website!

There is probably more stuff going on right now I can’t think about. My mind has been racing lately and it’s very difficult to keep on top of everything. I’m really working on getting out of the employee mindset and focusing more on C-level and scaling processes. Lots of stuff coming together and I can’t wait for the summer when Cave Tools picks up again and I start having more cash flow to play with.

 

Cheers,

 

Michael “Medium Rare” O’Donnell

Mike O’Donnell Learns Some More Business Lessons…The Hard Way

Posted on November 11th, 2013 in Lessons, Management, My Story, Reflection | No Comments »

This is one of those reflection posts that is long overdue. The fact that I haven’t done a complete reflection yet makes me sense that this will be a painful read when I’m finished because the answers to many months of struggling will be so clear. This post will recap the Unlimit3d project from the beginning to where we are today…still in Milestone 1.

I first started devoting time towards the unlimit3d project back in April 2013. I was coming off an intellectually stimulating, yet financially fruitless partnership with Wayne Marquez and was in the beginning planning stages for Cave Tools. The Unlimit3d website represented a significant revenue opportunity and a chance to bring large scale recognition to Hyacinth Marketing.

I remember spending many nights on Google hangouts with the Unlimit3d team helping them build out the scope of work for the website and outline all of their ideas on paper. Throughout these meetings I would offer consulting advice for their business model and share insights about how I have built and scaled my business.  Through these meetings with the Unlimit3d team it became very apparent that Mark was the type of person that focuses on minute details and has a hard time seeing the big picture. After what I went through with Wayne, I knew this was the worst type of person to work with as they crush momentum at every stage of the game. However, I decided I could put up with it because of the potential income opportunity. All of these meetings were done free of charge so I could position myself to win the bid for the website. This essentially amounted to about 3 months worth of free consulting before we finally signed the contract and began work on July 15. Furthermore, I allowed the possibility of them going with another company to make me under price the website to ensure I won it.

What I would do differently now: I allowed the dollar value of the website to cloud my judgement. I knew the difficulties of working with Mark’s personality type and I put up with it for 3 months for free in the “Hopes” of winning the bid. Could you imagine how pissed off I would have been if I didn’t win the bid? If I am to devote this much time to hand holding and building an SOW again, then I need to charge an hourly rate for this service and all of the consulting advice I was giving. I also consciously knew that I was going to be putting up with a ton of frustration working with Mark because of his personality type, yet I still cut my margins in order to win the bid. Cutting margins in favor of “just working a little harder” is a losing mentality that will eat you and your business alive.

A much more subtle lesson learned during this reflection is to watch how much I talk about my business and the strategies I use to run it. Throughout our meetings before and during this project, I have discussed in great detail how I have built my business, hired foreign workers, and created systems and operating procedures to scale. Over the past few years I have been involved in so many different entrepreneurial ventures and aspect of business that my peers can only dream of doing. When asked targeted questions, my narcissistic side takes over and I tend to flex my big dick by telling all of my strategies. While reading the 48 Immutable Laws of Power by Robert Greene, I realized that there is a certain benefit to leaving some questions unanswered. Having a certain level of mysteriousness to your accomplishments can actually be of great benefit. Not that Unlimit3d would have the ability to “steal” and implement all of my ideas/strategies, but when explained in detail, they lose the wow factor. A great example would be how I coordinate all of my shipping and fulfillment for Cave Tools products across the country. When explained in detail it all seems very logical and realistic, but if all you knew was that I’m a 24 year old guy that manages national distribution of his products in his free time, well…you get the point.

We started working on Milestone 1 on 7/15/13 with an expected completion date of 8/23/13. Today is 11/05/13 and we are still working on Milestone 1. So what happened?  How could things have gone so wrong? While I am about to discuss quite a few flaws and problems that have occurred, I need to take responsibility for everything myself. Over the past 4 months I have blamed all of my frustrations on my client and have allowed them to put me through a living hell. However, my role in this process is supposed to be the project manager. It doesn’t matter what the client does, it is the project manager’s responsibility to keep everything on track and to enforce deadlines. If I was managing myself, I would have fired myself 30 times over by now. When I look at the root cause for all of my actions and allowing things to get this way, it all comes down to me chasing the money and chasing the recognition.

I prepared for the start of this project by customizing a project management platform that would facilitate perfect communication between my team in India and Unlimit3d. I allowed my project manager in India to handle the majority of communication with Unlimit3d and I spent my time tending to other clients and building Cave Tools. I put blind faith in the fact that my project manager could handle a personality type like Mark’s and keep things moving with me checking in occasionally. Regardless of the fact that I can barely handle working with his personality type, I ignored the fact that Indians are notorious for not speaking up when there are problems. Everything is always “ok” until you specifically confront them. Three weeks into the design phase we still had very little progress and that’s when the problem was truly addressed, not in weeks 1 and 2 when it was obvious that we were not on track.

In order to remedy the situation, I had to step into a much more operational role in dealing with the client. This was not scoped for and has required more hours of my time than I ever could have imagined. Upon taking over control, I quickly realized a few major problems. The first was that there was no clear leadership role on Unlimit3d’s side. They were a team of 5-6 people all trying to exert their wills. This caused very slow decision making on their end and it also resulted in us doing tons of rework by modifying designs every way imaginable. I finally forced unlimit3d to funnel all decision making through 1 person and to ensure quick turnaround times so we could catch up to schedule. The person they chose was Mark. Mark has an amazing ability for giving ambiguous requests and having a short memory when those requests are implemented.

The overall look and feel for the website was quickly taken out of our hands and everything had to be done exactly to the Unlimit3d specifications. As a designer it is important to be able to add your own creativity into the design. Unlimit3d was constantly asking our opinions on every single tiny detail of the website design and then after we spent time crafting our expert opinions, they would ignore it and go with what they wanted. While this sounds fine, it put us into a reactionary mode instead of a proactive mode. We became robots and did exactly what Unlimit3d asked because the design was no longer our creation. This caused major problems down the line because Unlimit3d did not foresee issues with color schemes clashing and how different layout styles would not work well together. These are all things we would have been able to foresee if the design was even somewhat related to our idea, but Unlimit3d was calling all of the shots. Before we knew it, they were having us generate 8-10 design versions of every page and spending tons of time redoing different designs.

After 2 months of work, Unlimi3d approached us and wanted to completely redo the design. I allowed this to be charged as a change order like we put in the contract, but in reality, I should have confronted the situation then. My team in India charged me 50% more than our original change order rate because they were frustrated and this was a much larger job than just a change order. I took the hit to my margins without passing a 50% increase on to Unlimit3d because I didn’t want to disturb the waters. Once again I was making concessions and chasing the future potential of the deal.

After the change order was complete, I placed greater pressure on them to be more specific and detailed in their feedback so we could wrap up the design phase. Mark responded by asking for weekly face to face meetings on Mondays. This seemed like a good solution because it would help move things along quicker. The reality of these meetings turned out to have no impact at all on feedback and design turnaround times. They ate up at minimum another hour of my time each week and in many cases prolonged feedback times because Mark would wait until after meeting with me to give feedback. In addition to reviewing his feedback, we would also spend time on general conversation and of course Mark asking about how my business was going. I would respond by flexing my big dick about all the cool things I was doing as mentioned above and before you knew it the meeting was 2 hours long and accomplished nothing. If anything, these meetings were me coaching Mark on how to run/build a business and how to be decisive and provide clear feedback.

Our meetings never resulted in actual feedback because Mark would then need to go home and discuss with Azeem. The deal was that he would send me the final feedback before 9pm at night so I could get it over to India and they could work while we slept. Not only did they rarely make the 9pm deadline, but the quality of feedback was often so poor that I would still need to go over everything and rewrite it in a way that my designers could understand what they wanted. This resulted in me working full days managing both Hyacinth Marketing and Cave Tools and then coming home for a few hours break and then working late hours so I could filter feedback and send to India. Working an outrageous schedule like this quickly wears you down.

I can’t imagine how much money I have lost because I have allowed the Ulimit3d contract to consume me. In essence, they got 3 months of free planning work out of me and they paid for 30 days of work for milestone 1 and have now gotten 4 months of work out of that payment. I can’t even begin to put a dollar amount to the 6 months of free work they have gotten from me, the impact of lost sales opportunities I haven’t been able to pursue, the drop in performance for my current clients, the lack of time to focus on promotional activities or Cave Tools, and the inability to work on forward thinking projects to take my company to the next level and generate more income. It’s truly disturbing when I think about everything I have put into this project and how little I have received in return. Chasing the money and recognition is the underlying factor that has been clouding my judgement.

After living through all of this and reading everything I have just written, I just can’t believe I allowed things to get so far out of control on my watch and my wallet. I think it has been a combination of a sense of duty because we signed a contract, and the fact that I had a personal relationship with Mark before entering into our business relationship. I have never been one to back down or to give up on something and dropping this project would have been accepting defeat. My personal friendship with Mark has also caused me to give him so many concessions and non charges even when they were clearly justifiable based on the terms of our contract. On the other hand he has clearly exploited our friendship and has used it to take advantage of me. Parts of me wish he hasn’t realized what he is doing, but he has slipped a few times in conversation recently which suggests otherwise. He is fully aware that he is taking advantage of me and knows that I have been bound by a contract and handcuffed by the potential social fallout if things do not end smoothly between us.

This brings me to the current situation today. Since Unlimit3d insisted on taking the lead for all of the designs, the project has gone vastly out of scope. They have cherry picked ideas and features from all of the major websites on the internet and thrown them into the website. Every time they have added a new feature, I have been put in the bad guy situation where I need to advise them that this is something that we never planned for and is out of scope. Things like adding in Google + Circles for social interactions, advanced preloading scripts, various algorithms from sites like Imgur. From their perspective everything on the web today is drag and drop, so they think it should be as easy as copy and paste. In reality, there are hundreds of hours of programming that go into creating these things. They expect a 5 hour change order, but when I tell them it would most  likely be another 30-40 hours they argue and complain as if I am taking advantage of them. Every time something comes up the persist and make us spend hours working on the design of the new feature, even though they will most likely want to cut the feature out when they see the bill. More work completed on our dime that will result in nothing tangible. Based on the 3 months of working together to build the scope, we outlined a very nice feature rich website for them. Now when I try to explain what they are doing, it’s almost like we scoped out a Corolla and they want a full featured Mercedes…for the same price. It’s classic bait and switch, but I’ve allowed it to go on without taking a firm stance.

We scoped out Milestone 1 to include the graphic design of the main pages and some preliminary coding to get the website up and functioning. Unlimit3d has taught me to never mix design and coding together in the same milestone. After 4 months of work on this milestone, there is no money left for the coding portion. Since the coding portion of this milestone has changed so much by going outside of scope, I have discussed with Unlimit3d that we need to re scope and re propose the website.

Right now we are trying to finish up the final designs for the website so we can get to the point where we can re propose. The problem however is that my team is so frustrated and so sick of working for basically free that their work output is dwindling. It’s like pulling teeth trying to get the modifications done correctly so we can finalize designs. This is causing me to spend even more hours operationally to make sure we get the designs right.

Our plan for when we re propose is to make sure we can make up some lost money in the later phases of the website. As I see it now, even without me jacking up prices to try and make anything back, the price is going to be so astronomical that they will either cancel the deal or try to go a la carte and pull features out of the website until they get the price down to something reasonable. Either way, I am screwed. If they go somewhere else, I need to accept a major loss on the books and 7 months worth of work down the drain. I also feel the social ramifications of explaining to mutual friends my side of the story versus his. If they go a la carte, then the 100s of hours we put in to designing these features are all for not. Do I now charge them to remove these from the designs? If It is as simple as deleting a layer from a design file, do the 1 hour change order really do justice to the work we put in to that? Do I then pull a number out of my ass and say to remove anything it will cost you X amount because of the time we spent on it? All signs point to this ending badly in some way or another.

Up until a few weeks ago losing this website would have represented a major failure for me and would be the last thing I wanted to happen. Now, I feel just like my designers and programmers feel. I just want to get rid of these guys once and for all and never have to deal with them again. Even if my new proposal is accepted and results in me being heavily compensated, is it worth it to go through 7 more months of this? They are a poison I have allowed them to be a poison to my business, my bank account, and my mental and physical health. In this situation, I feel as though the only way to stop the poison is to cut the limb off.

If I ever find myself in a situation like this again, there are probably 100 things that I would do differently. For starters, I would definitely separate graphic design and coding. I would also hire an American designer and charge them out at an hourly rate. That way they could work in real time with the client and get everything done according to specifications. I would structure the contract to be heavily in my favor as the company. When we built the contract with Unlimit3d, it was very Democratic and I made a bunch of concessions (which came back to butt fuck me) in order to get the deal through. I would obviously price the website accordingly and make the change order rate very painful so it could serve as a stronger deterrent. I would also set up the milestones to be much shorter in length. That way we could never get to far off track and we could always keep cash flow coming in. I would also manage the project with a much firmer hand to ensure things didn’t get out of control. When you have the mentality of chasing the big win, you tend to make poor judgements. When you have the mentality of this is the way our company does things, you make much more objective decisions.

The key to success lies in your failures, not your successes. In the grand scheme of things, this will probably be a small failure for me. However, in my world as it is today, I have just failed on a large scale. This reflection post has helped me to finally come to terms with this failure and accept whatever consequences arise over the next few weeks. I know I’ve learned more from this project than I even realize right now and I’m actually glad that I had the opportunity to weather this storm. Learning from your mistakes is the essence of entrepreneurship and builds the foundation for your future success.

Inside the Mind of Mike O’Donnell – August 2013

Posted on August 11th, 2013 in Amazon, Business Development, Cave Tools, Couch Surfing, Efficiency, Goal Setting, Lessons, Management, Media Buying, My Story, Self Improvement, Shipping | No Comments »

This is more of a general update kind of post where I want to touch on a bunch of different things that are going on and also take a snapshot of what I’m thinking right now and planning for in the coming months.

Hyacinth Marketing

First things first, we have Hyacinth Marketing. The company is doing pretty well right now and I have been using almost all of the profits to support the growth of Cave Tools. If I didn’t have my clients at Hyacinth, I wouldn’t have nearly enough capital to be as aggressive as I am with Cave Tools. Right now the only sales I’m doing for the company is attending my breakfast meetings with the Million Dollar Marketing (MDM) group. In the past 2 months I’ve given 3 prepared speeches to this group of Doylestown business owners and these guys literally think I’m the smartest marketing person they’ve ever met. I share a ton of strategies and advice with them and they have been referring a good amount of clients over to me. It’s literally like having my own sales team working for me. They actually invited me to a golf outing next Friday with a ton of business owners in the area, so I’m really excited about that. Apparently the keg is tapped 2 hours prior to tee off so it should be a fun day.

Unlimit3d

The Unlimit3d project also started almost a month ago. I built a project management platform for this entire project and between my team and theirs, we have about 9 people communicating and sharing files every day. However, even with the ease of collaboration we are already falling behind schedule. As far as my estimates go now, I think we are between 10-20 working days behind where we need to be to keep pace. The problem is that we are still stuck in the graphic design phase and because Unlimit3d has so many people involved on their end, nobody is taking the lead on feedback because they are afraid everyone wont agree. This is causing us to have feedback response times of close to 48 hours sometimes and it is really slowing things down. I’ve had a bunch of talks with Unlimit3d and my development team on ways to improve efficiency with the feedback process. They’re getting better, but at this point we are already behind and there’s not much we can do about it because we don’t want to start coding and then have to do a ton of rework. The entire website is broken into 6 milestones, so the longer milestone 1 takes, the longer I need to wait for my milestone 2 payment and the less aggressive I can be with using that money on Cave Tools.

Cave Tools

Speaking of Cave Tools, we’ve gone profitable! Well…only for a short period of time. I described Cave Tools to my friend the other day like this, “I started out by digging a 2 inch deep whole with my initial investment. As soon as I filled it up to the surface, I decided to dig a 4 inch hole in the same spot. I’ve filled that up a couple inches so far, but then the other day I just dug another 6 inches deep.” Basically, due to such a lengthy supply chain (approx 2 months), even though I am making profit, I am not making enough to support growth on the timeframe that I need it. Therefore, I’m drawing money from Hyacinth to drive growth and hoping to make it back on the backend.

Right now I have another shipment of 2,000 grill brushes on its way to me now. Due to the money restrictions, I was late on placing my replenishment order in time to make sure I don’t stock out. It took 20 days to manufacture the next batch of brushes, but because of my tardiness I had to split the shipment into 400 brushes via air and 1,600 via boat. To put the cost in perspective, it costs me about $900 to ship 400 brushes via air and about $1,200 to ship 1,600 brushes via boat. That’s a ton of money I’m now losing because I don’t want to be faced with a stock out. This also counts as 2 separate imports, so instead of paying the fees twice, I decided to get a continuous import bond. Now, I’m a registered importer and can do as many imports as I want for a year without paying a fee each time. It’ll pay off by the end of the year, but for now it’s more money. The 2,000 grill brushes was my 4 inch hole. My new product line is the 6 inch hole…

Product Development

My next product line is a 3 piece grill set: Spatula, Fork, Tongs. From a money standpoint, this is pretty much triple my initial investment for just the brush because we have 3 new items. Depending on my cash flow, I may have to actually take investment to afford it, but I really don’t want to do that.

I haven’t paid to start manufacturing yet though because I’m waiting on my samples to arrive, hopefully this upcoming week. I’m super excited about this because I literally spent hours researching different sets and designing these samples. For the grill brush I just picked out a certain model, but the 3 piece set I actually designed. I also had a mold developed so I can brand them with the Cave Tools logo. Here’s a few pictures of what they look like:

 

IMG_4593

IMG_4601

 

I can’t wait to get my hands on them and just hold them! My goal with this set was to make them incredibly strong and durable. I took the average steel thickness in the grilling utensils market and increased my thickness by 20%. For approximately $0.40 per unit extra in steel, I will probably be able to increase my sell price by about $4-5. I have 2 sample sets coming in right now. One has a strengthen slot, which curves the metal a little bit to make it stronger and the other is just flat steel. I’m going to be comparing the two and also soliciting feedback from people to see which they prefer more.

These sets will most likely retail in the $30 dollar range. The best Weber set sells for $31 so I’m thinking of charging $32-35. I have a bunch of marketing ideas planned for when I finally launch the set and I’m also going to be building an early bird waiting list primarily via facebook where people can get a 20% coupon. I’m also thinking of doing a direct mail campaign to all of my grill brush customers. Something like a teaser post card with a coupon code.

Sales Trends

From a trend standpoint, I have noticed that my week to week growth has started to level out. We’re still making solid sales numbers, but the growth has slowed down, which is not good at all. I think it is do to a combination of our promotion efforts slacking a bit (Because I am very busy with Hyacinth) and possibly the seasonal effect. We are getting closer to the end of the summer so people are probably just not buying as many brushes. I have a couple of solutions on my success list to keep my growth trending up and protect against a winter slump in sales. My success list is different from my daily to-do list in the sense that these are strategic business advancements that will take my business to the next level. Building my wholesale program for instance was something on my success list.

Success List

At the top of my list right now is utilizing Multichannel Fulfillment to increase my ecommerce footprint. So what does this mean? I’ve outsourced all of my warehousing and customer service to Amazon and yes, they charge me an arm and a leg for it. Since I’m already paying them for this stuff, I might as well use them for sales I make outside of Amazon. Basically, my goal is to get listed on as many ecommerce stores as I can and when orders come in from those channels, I pass them through to Amazon and have Amazon ship for me. This means I can now get listed on websites like Buy.com and newegg.com and the other big ecommerce stores on the internet. There are many benefits to this from a marketing standpoint, sales, brand awareness, etc. I’m in the process of compiling a list of sites right now that I want to target. Then I need to build the processes to automate order handling from the various websites. This creates more of a management aspect for me unlike Amazon where when I make a sale they instantly do all of the order management. If I’m late on passing my orders through, then I get bad feedback and pissed off customers. That can’t happen. I also need to build processes to track my profit and loss on each website so I can be sure to focus my marketing efforts at the high converting channels. Finally, I need to figure out how to simplify all of this so my assistant can handle everything for me and just give me a weekly progress report. Sounds difficult, but I get a chubby for business development work, so I’m excited to take on the challenge.

Next up on the success list is becoming an expert at media buying. Media buying scares the shit out of me because it costs a lot of money and I have heard tons of stories of people losing their shirt with poor purchases. In short, media buying entails building out a profile for my ideal customer (ex: Male, 21-35 yrs old, interested in grilling, etc.) and then running targeted banner advertisements on the websites that the person hangs out on. I could run the adds by going through an advertising network or by doing direct purchases from individual websites. In order to do direct purchases, I need to build my own ad server to rotate and serve my ads. This is cheaper in the long run, but to get enough test data I’m going to need to go through an ad network.

The ad networks used to be reserved for just the big brands like Coke because they have outrageous minimum budgets like $10,000. Just to get enough sample data to optimize a campaign, you need to blow through at least $5,000 and have enough money left over to make it all back. However, Real Time Bid (RTB) networks have become readily available in the past few years which makes it easier for someone like me to break in. Basically, I’ll be able to bid in real time on remnant advertizing inventory that wasn’t sold via the big networks. I’ll still have to blow through about $500 in a test budget, but then I can optimize my campaign for the highest converting websites and approach them for direct buys.

My strategy for Media Buying is to target websites with a large visitor base that matches up to my demographic and also target sites with a visitor base primarily in the southern U.S. states. This way I can keep my sales consistent during the winter time in the north. In order to do this the right way and not lose a bunch of money, I need to do significant competitive intelligence research to figure out what the highest converting offers are for the grilling industry (ex: Free Recipe books, discount coupons, etc.). Once I figure out what my offer will be, I need to create it and then drive traffic to an email opt in form where I will give it away. Then I need to convert email leads into product sales on the back end. It sounds funny, but I don’t want to do what Weber is doing because they are very corporate. A lot of their marketing is designed for branding, not direct response marketing. I’ll probably end up breaking down all of Grill Daddy’s advertising because they are more of an internet based company.

Retargeting is also going to be a big factor in boosting my conversions. Retargeting is placing a cookie on someone’s browser when they visit your site, which then shows your ads all over the internet and literally follows them around to make it look like you’re everywhere. The majority of people will leave my offer page right away without giving me their email, but if I retarget them I will reclaim a lot of those visitors at a later date.

To be clear, my experience with paid advertising is limited to just Google pay per click. I’m pretty good, but I’ve never run any type of campaign this complex before or built a significant email list. I have a shit ton to learn and I want to get this all set up by October so I can be ready for the winter. I purchased a media buying course the other day from some pretty respectable internet marketers and I also got my hands on some training documents from Gauher Chaudhry, who is one of the biggest paid traffic guys in the world. I’m trying to do about an hour a day of studying and then I need to start testing on a small scale so I can scale up. As scary as this is to me, I know that if I master Media Buying, I can scale the shit out of my company and start to become a big player.

Traditional Marketing

I decided I need to be doing some more traditional marketing for myself as well. Instead of just doing online press releases, I need to start getting featured in newspapers and branding myself as a young up and coming entrepreneur. This will bring publicity to both of my companies and will also help drive traffic online and give me back links from authority news services. Regardless of how much money I’ve made so far in my career (very little compared to if I had a job), my on paper resume sounds ridiculous right now: “23 year old entrepreneur who has started 2 companies in the past 2 years, conducts business all over the world, and has 8 employees in 4 different countries. Has never accepted any investment and has built everything from scratch with hard work, determination, and virtually no budget.”

I dropped a quick email to a reporter that covers the bucks county area and I have an interview coming up next week. My plan is to get featured in the business section for print and online and then use that credibility to approach larger newspapers.

Couch Surfing

I originally planned to leave for my couch surfing across America trip in September after our fantasy football draft in Atlantic City. There is no way in hell that’s a realistic option for me anymore. I have way too much shit going on to just pick up and leave. I’m also strapped for cash right now because of everything I’m working on. I’m thinking a realistic departure date is going to be sometime in March/April of 2014 because it will be getting warmer for my trip and that also gives me time to do test runs where I couch surf for say a week at a time and learn how the logistics are going to work.

Working From Starbucks

I had quite the week this week working out of different Starbucks. The only people that are in a Starbucks during the day for the most part are entrepreneurs and people doing business meetings. I always have my headphones on, but when I hear an interesting conversation going on, I turn the music off and eavesdrop with absolutely no shame. They think I’m working and listening to music, but really what I’m doing is qualifying them. For the most part, I listen for a couple minutes and then go back to work, but sometimes I find some gems. This week was a good week for me.

Early in the week, I overheard people discussing a business plan for some SAT tutoring service. They talked about SEO and the need for a website multiple times in the convo, so as soon as their meeting was done I introduced myself and gave them each my card. Later in the day, they both checked out my LinkedIn profile and then within a half hour I had a voicemail on my business line asking for a meeting with me. Easy Peasy.

On Thursday, I overheard a conversation between a real young kid and a business attorney. He’s only 21 years old and his business which I will not include here, has already done over $1 million in revenue for the year. He recently fired his cofounder because she blew 250K on bull shit and now she is causing legal problems for him. After the meeting was over, I grabbed the kid and went with the I love meeting other young entrepreneurs approach. We talked for 15 minutes about different stuff and exchanged cards. I’m planning on following up with him sometime this upcoming week and seeing if he wants to grab a few drinks. Surround yourself by smart people and build relationships with movers and shakers and somewhere down the line it will pay off.

On Friday, I was working out of a starbucks in Philadelphia. This old dude was working behind me and looked at my screen and asked if I was building a website. I wasn’t, but a conversation ensued and this guy who I thought was a kook, actually turned out to be incredibly interesting. He went from being a taxi driver, to landing a job from a passenger in his taxi, to becoming a self taught programmer, to designing one of the world’s first heart monitoring machine software’s, to becoming #1 ranked in the world at competitive air hockey, to having an asthma attack in which the doctors fucked up and paralysed him. Ever since the accident, he has problems focusing and he talks weird, which is why I thought he was kooky, but he is intelligent as fuck. We literally talked and exchange stories for 3 hours on Friday (which I made up by working until 8:30pm fml) and he has invited me to stay at his house in South Texas when I do my couch surfing trip. He also took my card and wants to introduce me to a bunch of business people he knows in Texas. During our talk, we got onto the subject of encryption and I got an entire rundown of how to encrypt devices and back them up. He was at Starbucks on Friday rebuilding a computer’s operating system and he had a bag of flash drives. Each flash drive contained its own linux operating system on it. He basically had 7 different portable operating systems stored on these encrypted flash drives that he could plug into any computer and boom he was up and running.

Based on what I learned from Joe, I set up a bunch of encrypted files on my computer today. With my level of encryption, not even the NSA could break into my computer to look at my documents if they wanted to. Seriously, and the NSA knows it, which really pisses them off. Not that the NSA would ever solicit my documents or anything like that, but if my computer were ever stolen like it was in Montreal, all of my information is safe. Furthermore, I now plan to back up my files everyday on my encrypted flash drive so I can be completely portable instead of having to drag my laptop around. Bad Ass!

Mike O’Donnell Fires His First Customer

Posted on August 11th, 2013 in Lessons, Management, My Story | No Comments »

Buckle up, this is a good one. I almost contemplated calling this post the legend of Matt Zinman because the weekend out in Newtown was truly legendary. Let’s jump right in.

The first time I met Matt was when I was working with Wayne in Doylestown. Within 15 minutes of the start of Wayne and Matt’s meeting, an argument erupted and Fuck You’s started flying back and forth between both of them. This was classic conversation style for Wayne, but I figured Matt was just responding to Wayne in the same manner. It  turns out they’re very similar people, except Wayne actually had his shit together. On Matt’s way out that day, we exchanged cards and he told me he was impressed with me and would like to stay in touch for future business together. A quick, “Nice to meet you Mike. Go fuck yourself Wayne.” and he was gone.

Matt always works out of the Starbucks in Newtown, so I would run into him every now and then and keep the contact warm. He has a non profit that “attempts” to raise money for unpaid internships and has had quite a few conversations with Justin and Dreama before, so we had that in common. A little over a month ago I get a call from Matt and he wants to start doing business together. He wanted to do hourly work instead of by the project, which is not something I normally do. He gives me the classic start small and then work up to bigger dollar value projects pitch and I figured whatever, I’ll do some hourly work for him.

Before he has ever given me any work, he starts CC’ing me on tons of super long emails that have nothing to do with me at all. I’m talking like 3 emails a day of 5+ pages. He also asks me to do a conference call with him where he introduces me to everyone as his marketing guy. I eventually had to have talk with him because he was wasting my time and not giving me any work. He’s the type of guy that wants a ton of work done without paying for it.

After my “talk” with Matt, he starts giving me some graphic design and programming work. In addition to having my guys do the work, I’m wasting tons of time just trying to manage him. He keeps calling me and asking form y opinions and basically trying to have me build his marketing strategy for him. Meanwhile, I’m busy as hell with Cave Tools and 4 new Hyacinth Clients and he is destroying my efficiency. I finally tell him that I am not “on his team” and I charge $100 per hour for consulting if he would like to continue calling me for everything. Otherwise, we will do the work he asks us to, but that’s it. This is now strike 2 for the guy and during that phone call he was raising his voice and getting aggressive while I was trying to remain calm and diffuse the situation.

We continue doing hourly work for him and everything needs to be done right away. Now, Now, Now. Most of the time, we didn’t have any passwords to access the sites he needed work on (we had to hack into 3 of them to reset pws he lost) for about 2 weeks. Then I would get an email at 3pm on a Friday and the immediate work for the last 2 weeks now needed to be completed by Saturday morning. At this point he is really getting on my nerves and he has the balls to tell me I am missing my deadlines.

He asks to have a quick meeting with me in Newtown and since I’m already there shipping out some grill brushes to somebody in Regina, Canada (Amazon only ships domestically), I tell him I’ll meet him at the Starbucks. I walk in and see him sitting in his chair wearing a muscle shirt and we start to make small talk while I’m waiting for my coffee. He tells me about how he almost got in a fight over the weekend with a bunch of 20 something year olds at a bar in Richboro and then slips in that he’s been getting kicked out of too many bars from drinking too much (He’s mid 40s). He also said he needs to clean up his act because he is going to be a very prominent public figure soon…

When we sit down, he starts showing me all this random shit that once again has nothing to do with me. I keep looking at my phone and showing strong disinterest and tell him we’ve been here for over a half hour and haven’t discussed anything yet. When we hit the 45 minute mark I tell him I need to go and then he jumps right into what he intended for the meeting, giving me more work to be done immediately. I tell him that we need to close out the first invoice before any more work because we’ve been working for over a month without any payment. He starts to get aggressive again and I tell him that we won’t do anything until we finish this first round of work and can get paid. Tensions rise and he is now raising his voice and making an ass of himself in the middle of a packed starbucks. Then he starts poking at me and trying to get under my skin. This is pretty close to how the rest of the convo went:

Matt: Look at you man your face is all red, you need to calm down. What’re you threatened by me because I’m wearing a muscle shirt?

Me: Matt, have you ever heard of Pareto’s Principle?

Matt: Yea, the 80/20 rule…

Me: Yea, 80% of my profits come from 20% of my customers. 80% of my frustrations also come from 20% of my customers. What side do you think you’re on?

Matt: Are you kidding me?

Me: We’re no longer doing business together

Matt: Are you fucking kidding me? You’re going to reject my money? (Freaks out and makes an even bigger scene)

Me: This meeting is over. You’ll receive your invoice by the end of today.

I start walking out to my car and he follows me out screaming about how I’m ruining the launch of his non profit. I tell him we’re doing our best for him and if he’s unhappy he can work with a different marketing company.

Later in the day I get an apology email from him. I respond and tell him I thought about things and am sticking to my decision. The next day I get a pissed off email from him saying how work is separate from an invoice (insinuating he isn’t going to pay me the $1,500 he owes me) and that I’m ruining his launch, and his website isn’t working because of mistakes by my team. I check his website and it’s working fine so I tell him that all work has been completed exactly as asked and his website is working fine. I attach the invoice again and say if he has any other questions to let me know.

His response, “Oh, ok my bad. Nothing else then…besides the fact that you won’t work with me.”

Now for the good part. Last Thursday I’m outside at Isaacs in Newtown with a bunch of friends and I’m telling them this story. About 10 minutes later our friend Hank comes over and says, “That little Italian dude is here again buying a bunch of shots for random people.” He describes Matt to a tee and tells a story about how Matt got kicked out of Isaacs last time he was there. I decide to not go in because I don’t want to get into any drunk altercation with him.

After Isaacs, we go over to La Stalla because it’s cougar night. This place is known all over the internet for the best place to pick up cougars and people drive from all over to go there on Thursday nights. Its pretty ridiculous. Tons of divorcees and 40+ year old moms all dressed up in sorority outfits dancing with old fat dudes to rap and hip hop. Tons of rich plastic trophy wives too. The whole place is a show in and of itself. Watching old creepy dudes pull the same moves that didn’t work in high school 30 years ago is hilarious.

Anyways, I’m waiting in the line for the bathroom and across the room I see Matt in an argument with one of the waiters and screaming at him. When I come out of the bathroom he’s gone. I had to leave because I had work in the morning, but apparently Matt came back after I was gone. He walks up to my friend Kurt and says, “Hey dude I just started my own business, isn’t that cool? By the way, if you see anybody walking up behind me can you let me know?”  Within 5 minutes, Kurt said the bouncers came over and carried him out and said he’s been kicked out too many times and he’s never allowed at LaStalla again.

The next night, we are all out in Newtown again and I see Matt at the Black Horse Tavern. He’s talking to Hank again and since all my friends were over there, I decided to just say hi to him. We make no small talk and when he realizes these are all of my friends, he just walks away. About 15 minutes later there is a bunch of commotion and we all go outside to see what’s happening. I have no clue what happened, but Matt was across the street on the ground with the bouncer pressing his face into the sidewalk. I think he tried to fight a bouncer or something. Every cop in Newtown shows up to the scene, but it was too late because Matt took off running down the road already. I guess because he is going to be this big public figure soon and that would be bad press…

Everyone outside the bar has their own stories about Matt and how he has literally been kicked out of every bar in Newtown. The dude is an absolute mess.

As For an update, Matt will not respond to any of my emails. He is approaching the 30 day mark for his invoice and I’m assuming he is going to try and not pay me. He has about 10 more days left to pay, so we’ll see what happens. My attorney has a collections department, which I can use, but ideally I would like to just get paid and not have to ever deal with him again.

Mike O’Donnell Receives An Education That Can Only Be Earned

Posted on March 21st, 2013 in Business Development, Goal Setting, Lessons, Management, My Story, Philosophy, Reflection, Self Improvement | No Comments »

It all started on Sunday, January 27, 2013. Sitting in the same seat in the same Starbucks as I am now, I met Wayne Marquez. I had just returned from the Traffic and Conversions Summit out in San Francisco earlier in the week and I was busy thinking about my life and my business. I had been home from Montreal for 4 months and to put it succinctly, my business wasn’t working out. I could throw a thousand reasons in the air about why my business wasn’t taking off, but at the end of the day, those reasons were just excuses to soften the blow of reality. My goal at Starbucks on that Sunday was to come up with a new plan to generate business and dig myself out of the whole. If I failed, I was heading back into corporate America to live a life I absolutely dreaded.

While I was in the corner trying to figure out the next stage of my life, Wayne Marquez walks in and starts up a conversation with another person in the room. It just so happens that Wayne is from New York, so my noise cancelling head phones are no match for his loud and obnoxious accent. What’s worse is that he is spewing out business ideas left and right. I have a personal pet peeve with “idea men” who never take action and this guy kept interrupting my concentration. So I fired back with 3 or 4 comments about how he can monetize every idea he just talked about. I thought I was putting him in his place by calling him out, but then I discovered who this Wayne character really was.

Shortly after graduating from NYU Law School, Wayne started a non profit called Directions For Our Youth, which survived him and has a multimillion dollar budget to this day. He also created an educational software program which was used by inner city schools nationwide and a children’s software company. With the economic downturn of recent years, school budgets had dried up and likewise, his businesses were running at a fraction of the profit they once were. He was in Starbucks working on his newest business, Apprentice Force. A long conversation ensued and by the end of the day, I decided to work with him to help bring Apprentice Force to the market.

Apprentice Force is a company that facilitates performance based hiring relationships between small business owners and people looking for work. The problem with the company however, was that Wayne was doing all the sales himself and hadn’t figured out a way to scale the company. According to Wayne, this was “Mickey Mouse Money” and he wanted to use my internet marketing background so he could start making real money with Apprentice Force.

Wayne had a lot of what he called “Clay.” A laundry list of achievements, a history of taking action and building businesses, tons of connections, and a well thought out business model. Tons of time and money had been invested into Apprentice Force and the business model was solid, he just needed to start scaling. Since there was no cash flow, he wanted me to work for free and to prove myself by helping him build the company. He told me that with my skills and his “Clay” we could both work our way to the top and start making real money.

As concerned and persistent as I was about quantifying the money I would receive once we started generating cash flow or obtaining a piece of equity in exchange for helping him build the business, I couldn’t pin him down to a deal. He said that once we got some cash flow he would feed me money, but if we were going to work together it would be on faith and trust and he wouldn’t agree to any set “deal” for my services.

Of course with my luck, my business struggles of the past 4 months were quickly fading away. My consistent networking and public speaking was starting to pay off in referrals and new business. Things were finally starting to swing my way, but now I had to make a big decision. Continue working in my business and sign up a few new clients or devote my full time effort to working with Wayne for free. As I put it in a text to my brother, “I can either continue doing the day to day and make a couple grand this month, or I can cross my nuts and shoot for the stratosphere.” Needless to say, I decided to work with Wayne. Even if I didn’t make any money at all, I would build a valuable relationship, learn a ton from a highly successful entrepreneur, and have the opportunity to push my skills to the limits.

We were both in a position where we didn’t have a lot of money to spend and we needed to start generating cash flow fast. During one of Wayne’s story telling sessions (He has tons of stories for any business or regular situation you can imagine) he told me about how he organized a “Debt Burden Day” during his time at NYU Law School (most expensive law school in the country at the time). On this day, every student wore red to school and they also wore buttons proclaiming how much debt they would be in upon graduation. One thing led to another and we decided that since student debt is such a pressing issue today, we could probably have similar success if we organized our own Debt Burden Day (later renamed Debt Awareness Day). Since Apprentice Force appealed to the same demographic, we could use Debt Awareness Day to slingshot Apprentice Force into the spotlight and quickly start generating cash flow. Within a half hour, Wayne secured office space for us in Doylestown and 23 straight 13-15 hour work days ensued. Every day of this campaign was documented on our blog www.creatingnasda.wordpress.com if you would like to learn more about what we did.

This post is about reflection, so I don’t plan on recounting everything we did over that time period. However, I would like to recount what I learned and how I have grown in the short time period of working with Wayne.

Brainstorming

The first major lesson I learned was how to properly brainstorm. I had participated in plenty of brainstorms before, but never with anyone of Wayne caliber. By nature, my personality type has always been very analytical.  While this serves me well in many respects, it also serves as a blockage when I brainstorm. Without realizing it, I get very caught up in how realistic certain ideas are and I get tied down analyzing everything instead of just doing a pure brain dump of ideas. Give Wayne a white board and someone to bounce ideas off of and he can literally brainstorm for 5 hours straight without stopping for air. During one of our 4-5hr brainstorming sessions in the initial planning phase, Wayne reacted to one of my analytical comments by saying, “Don’t piss on reality in a fucking brain storm! You let the ideas flow.” This comment really hit home for me and will be something I constantly remind myself of every time I brainstorm in the future. He hit the nail on the head.

 

Communicating Like a New Yorker

By the way, Wayne curses A LOT and it took me a little while to adapt to his style of conversation. We definitely had our growing pains in the beginning of working with each other. Of course by growing pains, I mean shouting matches where the words “Fuck You” were thrown around like the word “Sir” in the military. It’s just the New Yorker way of communicating I guess. Here is a video of me imitating Wayne after an argument. We laugh about this video all the time now:

Like I said, it took us a little while to learn to work together, but after the first week or two things got a little better.

 

CEO Mentality

As a quick extension to the conversation that initiated that video, I learned one of the big reasons why only a small percentage of the population could ever become a CEO. As Wayne would put it, “the CEO is the person that will stop at nothing to achieve his goals. When the rest of the executives are cowering in the corner and whimpering about a disaster or some impossible task, the CEO is the person that presses on even when failure is seemingly imminent.” I don’t know if I have CEO blood in me, but at the same time, I have never been passionate enough about something that I would stop at no costs to achieve it. This seems counterintuitive considering how passionate I am about being a successful entrepreneur and achieving lifestyle design, but I guess only time will tell what I’m really made of.

 

Work Philosophy

A lot of our differences to this day stem from a major difference in work philosophies. Wayne approaches work with the philosophy of a perfectionist. Everything must be absolutely perfect before anybody can see it or before he can move on to the next item on his to-do list. This philosophy is great when it comes to producing super high quality work, but the downside is that everything takes much more time to do. My philosophy is the exact opposite. I prescribe to the 80-20 rule and like to get tons of work done in short periods of time. The principle states that 80% of the work you do results in 20% of results and likewise, 20% of the work you do results in 80% of your results. The Pareto Principle, as it’s called, applies to almost every area of life without fail. Since we were striving to achieve the near impossible task of creating a national movement in 75 days, I was of the belief that we needed to get things going Now and we couldn’t waste our time getting caught up in minor details that would only produce a marginal increase in benefit. We could always go back later to cover our tracks. In many cases our polarized philosophies kept us both in check, but in other cases it killed us.

 

Business Models

One of Wayne’s best attributes is his ability to develop, analyze, and compare different business models. He has been involved in so many different types of businesses and situations that this skill comes naturally to him. The best way to really learn about business models is through time and experience. By listening to all of Wayne’s stories and challenging him, I was able to learn things that would have literally taken me years of failures to pick up on my own. Wayne shared the following software development model with me one day as a way of disarming me from my action-action-action mentality:

 

 

 

 

The diagram illustrates that the cost of making a change in the beginning (inner circle) only costs you $10, while the same change will cost you 10x more each time you progress to a later stage of development. The point being that preplanning is incredibly important and you need to have complete clarity of your vision before you move on to the next stages of any project/idea. In this situation, he was completely right. Lesson learned.

 

Money Is Not Always The Answer

Wayne cut his teeth in business while starting his non profit. If there is any path to take to the top, this is probably the hardest. Many businessmen find it hard to accomplish tasks with limited budgets, but in a non profit you need to accomplish the same tasks with no budget! Something I’ve learned through my experiences is that having very little money can actually be a good thing. It forces you to be creative and find better solutions compared to when you have money that you tend to just throw at problems.

 

First Impressions

While working at his non profit, one of Wayne’s main responsibilities was to raise money. Through all of his “pitch” stories, there was always one main principle/concept that seemed to stand out. Once people categorize you in a specific dollar range, it becomes incredibly hard to remove that perception even when you’re worth more. This short story illustrates the concept perfectly: When Wayne was starting out and had a very small budget, he pitched a company for a $5,000 ish donation to the non profit. Years later, when they had a million dollar plus budget and companies typically donated 5 and 6 figure sums, he could never get that same company to ever donate more than about $5,000. The reason being, that they categorized him in that range and could never justify donating a larger sum. I see this concept hold true in tons of areas in life, including when you start a business relationship by working for free (more on this later).

 

Leverage

Leverage, Leverage, Leverage! Working with super short deadlines and a minimal budget has helped me internalize the concept of leveraging. Time is a fixed resource. Everyone has the same amount of time available to work each day. The main factor that separates the most productive people in our society from the least productive is the ability to leverage technology, resources, people, etc. Every time I noticed that our progress was slowing down, it correlated to us getting “stuck in the weeds.” When we realized this, we took a step back and figured out a way that we could leverage these tasks by either getting other people to do them for us or by using a piece of software. Is it worth 5 hours of my time to research the best ways to organize a student population or is it smarter to pick up the phone and call someone who has built their career on organizing people? Any time you can pull yourself out of the weeds and learn to leverage, you will cut out costly mistakes and be much more successful at what you’re trying to accomplish.

 

Building An Asset

One of the first books that inspired me to be an entrepreneur was Rich Dad Poor Dad. In this book, Robert Kiyosaki talks at length about the concept of building assets. I have understood this concept for a long time, but I never really internalized it until very recently. My goal on that Sunday at Starbucks was   to find a way to start building an asset (in the form of an email list or info product), but working with Wayne has given me much more clarity about what that really means. While most people would categorize me as a business owner, I would really categorize myself as self employed. If I stop working, the business disappears. Now of course you could say my service business has assets in my email list, business processes, personnel, brand equity, etc. but my view of an asset is something that will keep working for me even when I am not working. This is just one of the many things I have identified as wrong with my business model, along with my USP and my “appeal to everyone” strategy. Hyacinth Marketing has been a great learning experience for me, but it is time for me to start focusing on building a business I want to do for the long term. While I am still working on (in) Hyacinth Marketing, I am devoting my free time towards a business that will be more sustainable. More on this in a later post.

So why didn’t we continue pressing on with the National Alliance for Student Debt Awareness and Debt Awareness Day?

I had to be crystal clear on the answer to this question before I ever considered pulling the plug on this project. After all, my only downside was to fail publicly. Public failure may seem scary for most people, but this was the least of my worries because I knew I would learn an enormous amount through the experience.  My position on failure is summed up perfectly in one of my new favorite quotes,

“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.” – Theodore Roosevelt

My upside, on the other hand, was monetary gain, a successful new business venture, tons of media mentions which I could use as credibility to open doors down the road, pushing the limits of my ability, etc.

When I put it this way, it looks like I made a poor decision based on the fear of failure. Actions speak louder than words Theodore! Who knows, maybe this will hold true if I’m in the same position as I am now a couple months down the road. Either way, I stand behind my decision and think it was the correct decision based on my time opportunity cost and the lifestyle I want to live.

While it’s true that successful CEOs possess the ability to press on in the face of adversity, they also possess the uncanny ability to determine viability at a very early stage. That way they can focus their efforts on projects that will give them the largest returns.

From day 1, I knew that our success would be dependent on our ability to motivate large numbers of people to take real action against an issue that affected them indirectly. It’s true that student debt impacts every student in America, but many of them don’t feel the effects until many years after they graduate when they finally start to pay off their loans.  While we knew the typical numbers in this type of situation were very small, we banked on the fact that we were sitting on a mass media powder keg. Based on the timeliness of Debt Awareness Day and the severity of the student debt crisis, we were hoping we could create a social media firestorm around the issue. We also knew that tons of other organizations had attempted the same feat we were attempting and never created sustained traction. By uniting each of these organizations and utilizing the Apprentice Force project management software to bring accountability to action takers, we thought we could create enough momentum to get the ball rolling.

When we finaaaaaly launched and started marketing ourselves, we realized that the “pain” was too indirect to get a ton of people on board quickly. In other terms, it would take a prolonged effort to get enough traction to make a significant impact and it would be a long time before we started generating any money from this venture. From a time opportunity cost standpoint, would I rather spend 80+ hours per week struggling to make this a successful venture or would I rather spend those same 80+ hours per week working to build an asset that I would own. The fact that I stayed on board for so long is actually a tribute to Wayne’s amazing ability to motivate people.

[Warning: I am about to make a personality judgement based on how I feel right now. I would normally refrain from doing this, but this thought process was critical to my decision making]

My second determining factor was the lifestyle I want to live. What if we had succeeded? I would be tied in to working with Wayne for the foreseeable future. Granted, I could always leave and do my own thing at any time, but like the software development model, the cost would be much greater to myself and to Wayne when I left. As frustrating as it was working with Wayne for 14 hours a day, I could live with that. I could control his attempts to micromanage my projects and I could deal with his perfectionist mentality. My biggest mental struggle of working with Wayne was the belief that he was the same person as he was when he achieved all of those great business feats.

Wayne achieved everything he did in life because, in his words, “He was a man of action. He didn’t get caught up with all the minor details; he just took action and figured it out along the way.” Can you see why he took an affinity to me? The fact is, once he became super successful and wealthy, he lived the easy life. For the past 11 years, he never had to do real work. His business generated 6 and 7 figures a year income for him and he spent his time travelling around and enjoying life. I don’t blame him one bit. If I never met him and learned his story, I would be destined to follow the same path. What I learned however, was that time changes people. He could talk about all his past achievements as much as he wanted, but as great as they were, he was no longer that same man of action. My opinion, based on working one on one together for over 300 hours in a month, was that he had become an idea man, not an action man. Without a team of people to implement his ideas, he couldn’t pull the trigger. Ironically, this was the reason I started speaking to him in the first place.

Furthermore, I started my relationship with Wayne on the basis of working for free. Just like the business that only donated $5,000 to Wayne’s non profit, how would I ever justify a higher salary (salary because I would be working for him, not as a business partner) when he had already gotten all the “goods” for free.

To be clear, I haven’t ended my relationship with Wayne. He still has the ability and experience to rise to the top again, but I can’t be the person that does the leg work to get him there. Like the saying goes, you can bring a horse to water, but you can’t force him to drink. The only factor holding Wayne back right now is his ability to take action. I’m in a delicate position right now because I need to maintain my distance, but at the same time, keep our relationship warm. If he gets some traction again, I want to be there to amplify it. If he doesn’t, then he is still a friend and a valuable business contact that will be mutually beneficial somewhere down the road.

Wayne described me to his wife once using this metaphor, “Mike is like a boy that grew up in the country. He has an entire arsenal of weapons and can tell you everything about each weapon in great detail. He has even used a handful of the weapons at the firing range, but he has never been in battle.” Wayne almost didn’t tell me about this conversation because he didn’t want to offend me, but once I heard him I agreed wholeheartedly with his description. I have spent the last few years studying all the titans of business and learning as much marketing knowledge, techniques, and strategies as I could. Starting Hyacinth Marketing and working with Ben in Canada was just me taking my weapons to the firing range. I’ve been practicing for long enough, but now it is time for me to find my battle. Pretty soon I will be starting my next business venture and I’ll be looking for a fight!

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    Mike O’Donnell Learns How to Utilize Outsourcing and Delegation to Build a Business Machine

    Posted on July 23rd, 2012 in Business Development, Canada, Management, Outsourcing | No Comments »

    One of the things I often hear success coaches and business mentors say is that you need to put yourself in the mindset and act like someone who makes the amount of money you desire to make. For instance, someone who makes a couple hundred thousand dollars a year does not spend their time doing $10 or even $30 an hour tasks. Their time is much more valuable and much better spent doing other more strategic things in their business. As someone who has yet to ever have considerable spending money, I have developed the personality traits of always trying to do things myself. Although this method saves me money and gives me the opportunity to learn many new things, lately I have been realizing just how powerful outsourcing and delegation can really be. It is good for me to learn and understand these new things, but when it comes to implementation I have been reminding myself of this valuable quote, “A Jack of all trades is a master of none.” My biggest strengths are in Marketing strategy and business management/development and that is where I need to focus the majority of my time.

    Now that I have explained my current mindset, I would like to dedicate the rest of this post to the discussion of outsourcing and how it plays a vital role in the creation of a business machine. You see, I have actually known how to outsource for a few years now, but it wasn’t until I started working with Ben that I was really able to start shifting my mindset from relying on myself to utilizing other people’s expertise. Before coming to Canada, I actually did my own SEO and manually built citations every day because that way I didn’t have to pay anybody to do what I already knew how to do. Now, we have a team in India that we have trained to provide SEO the way we want them to and I can spend my time on other more strategic projects. The key lesson here is that if you want to make your business scalable, you need to remove yourself from the equation. You need to train people and build bulletproof systems so the business can run without you.

    As far as the SEO team in India is concerned, that was in place before I got to Montreal. My personal experience with outsourcing has been from developing our system for posting reviews for businesses throughout Canada. Ben had developed a system before I got here, but as our reputation management client base has grown, I have been in charge of modifying the system and hiring, firing, and managing our outsourced work force.  So let me give you an overview of what this “system” really is.

    We have almost 300 businesses throughout Canada that have the ability to send us anywhere from 12 to 120 reviews per year. These are real reviews from their customers and we are in charge of making sure they get distributed across the internet in a natural pattern over a certain period of time. We receive these written reviews either by pdf in an email or through a fax number which gets forwarded to an email. Some weeks we receive only a handful of submissions and other weeks we can receive over 100 review submissions. With only a few hours per week of management, our system allows us to have every review transcribed into a spreadsheet, posted on various business review sites, and double checked that the review goes live. At any point in time I can tell you both the macro and micro metrics of the system. For instance, how many reviews a certain business has submitted, how many have been posted, where each review has been posted, how many have been verified as live, and the percentage of plan usage that business has utilized so far.

    To make this system work, I have been utilizing a Filipino work force. Before Montreal I never actually implemented outsourcing, so this alone has been a tremendous learning experience for me. Like most learning experiences I’ve had to make a couple of mistakes before I really got the hang of things. Originally we relied on 1 person to do the review transcriptions, a girl named Emmalyn. She was the first person I had the opportunity to manage and I learned a lot from her. The first lesson was how important communication really is even for a data entry position. When I was managing Emmalyn, I didn’t have any form of regular communication with her and I just accepted her work as is. I mean, how bad could she mess us data entry, right? Big mistake. One day, I noticed our queue starting to back up and when I checked in on Emmalyn I learned that she hadn’t worked in 2 weeks. She claimed a bad storm had been disrupting the internet for 2 weeks, but when the internet was available, she never notified me of the situation and that she wasn’t working. From then forward, I learned that I needed to have a standard daily communication from all of my workers and that I needed to encourage communication so I could plan ahead. I also learned that we needed to have redundancy in the system. Emmalyn not working became a single point of failure and the queue backed up. We needed to have multiple people trained to do this job so when something broke down we could react quickly.

    My next big outsourcing lesson was a hiring mistake. Interviewing for a data entry position is tough because it is hard to distinguish between good and bad candidates. It took the hiring of a lady named Dennise to teach me how important my job was to frame the importance of her position and motivate her to want to work. I hired Dennise through a simple sms chat on Skype instead of speaking with her live on audio. This was a big mistake because I just took her word that she understood everything I had been saying. Dennise ended up not being a right fit for the job because of her lack of attention to detail and I eventually had to fire her. It was my fault that things had to end the way they did because I made a poor hiring decision. On all future hires, I have made it a point to really get to know the person before deciding to hire so that I know they will be a good fit.

    Taking the lessons that I learned, my system now consists of two people who are both cross trained to do 2 separate jobs. They work on Mondays and Wednesdays and alternate jobs so 1 person is doing job A on Monday and the other is doing job B and vice versa for Wednesdays. At the end of every day, I get a detailed report from each of them letting me know exactly what they did so I can spot check for quality and also letting me know any questions or comments they have. All questions get added to an FAQ document which is available for all future hires for the position so I can speed up the learning curve. By having them work strictly on Mondays and Wednesdays, I can quality check on Tuesdays and Thursdays and also make modifications to the spreadsheets as needed. My current employees, Jonnel and Caecilia, are highly motivated and really enjoy working for me because of the open communication and level of respect that I give each of them.

    When I say this system only takes a couple of hours per week to manage, that’s because I am still involved in the quality control process. While this is good because I have a certain level of comfortablity, the next phase is to remove myself all together and bring in another person to do quality control. For me this is a big step because I need to relinquish more control, but it will allow me to spend my time more wisely and help shift my activities away from operational and towards managerial.

    When I talk about how we are focusing on building business systems, this is an example of just one system. Both Ben and I are spending the majority of our time building systems like this into the business so we can quite literally build a business machine that generates profit without our daily interaction in the operations.

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