I got accepted again into Sovereign Academy and I’m totally siked to be going back to Lithuania! After everyone is accepted, they create a Facebook group for us so we can start communicating and introducing ourselves. Just like last year, there are a ton of super interesting people doing all sorts of business ventures all over the world.

When I did my introduction, I talked about Cave Tools and what I was hoping to get out of the camp. It was funny because one of the other members, Casey, commented that his girlfriend is the lead industrial designer for a company called Outset Brands and wanted to know if I ever heard of them before.

When I first started Cave Tools, I didn’t know what the hell I was doing so I contacted a bunch of manufacturers in the US to see if they could make my grill brushes for me. Outset brands is headquartered about 10 minutes from our house in Newtown (I moved out to Philly in June). When I called them up and asked about manufacturing they basically just said no and blew me off because I would be a direct competitor. Almost like if Pepsi called up Coke and said, “Hey, can you make some soda for us and put our label on it?” I didn’t really know what I was doing so I just moved on.

Anyways, Casey’s girlfriend is their lead designer which is a pretty crazy coincidence. We met up the other night for drinks to get to know each other before camp. Just like every other BlackSmither I’ve ever met, even though we are complete strangers we had a million things in common to talk about. We had a couple drinks and then went over to an Art Gallery in Old City to meet up with his girlfriend. I’ve never been to an Art Gallery before so it was a pretty cool experience. He knew the owners and pretty much everyone there because he goes every month and has invested in a couple pieces.

It was cool talking to his girlfriend as well because she designs products like I do, but from a totally different approach. When I design products, it’s a data driven thing where I just pick out the features I want and then get the manufacturers to do it. For her, she has entire design books of sketches that she draws up and tries to pull in different themes into the designs. It’s much more of a mix of engineering and aesthetics versus shooting for solving market needs.

Outset is also at a different stage of business though where they already have a full product selection so they are just designing different variations of every product. Where they may have 20 different grill brush designs, I would only ever have 1 until I fill out my catalogue of products.

 

Getting Accepted into Maverick Next

I’ve mentioned the Mavericks (Probably rather unintelligently because I didn’t know much about them) on my blog in the past.  In short, they are a group of 7 and 8 figure business owners, mostly based in the US. They cover a wide range of industries, but in particular, almost every major mover and shaker in internet marketing is either a member or connected to the group in some way.

Shortly after Blacksmith Camp last year, one of my friends, Jock posted something on Facebook about how he was attending the Maverick Next summit. I’m pretty sure this was the first time I ever heard about Maverick Next. Next is the Maverick Version of Sovereign Man where they look for young entrepreneurs and try to mold them. To join Next you have to be under 25, but once you are in you are allowed to stay until you are 28 years old. At that point, you are expected to be doing at least $1 million per year and apply to the main Mavericks group.

In order to get accepted into the group you have to be doing 6 figures per year in revenue in your business. They also look heavily into your character and experiences. They are also looking for people who exhibit “Maverick DNA” which they basically describe as the intersection between Business Growth & Profits, Entrepreneurial Lifestyle, and Impact Driven Objectives. There’s obviously much more to it than that, but those are the 3 main areas.

After Aruba, I found out that the Mavericks were putting on their own event in Connecticut August http://gocampmaverick.com. This camp is bad ass! The way I imagine it is like being in the movie Heavy Weights where they have a giant lake with tons of activities and they even have the big blob thing that launches you into the water. The only difference is that the attendees consist of about 300 – 400 of the most influential business owners in the country. Oh…and all of the lodges are luxury cabins and there is unlimited top shelf drinks for 4 days.

On the sales letter it mentioned that 100 spots were reserved for Maverick members and Next members. The remaining 100 spots would be open to the public, but special priority would be given to people who were personally recommended. Attendance was application-only “to curate the ideal mix of entrepreneurs, business leaders and impact makers from a multitude of fields together in one remarkable place.”

After reading the sales letter, I immediately sent Sophia (Yanik’s cousin/event planner I met in Aruba) a private message on Facebook. I opened up with a friendly comment about Aruba, then mentioned I heard about the camp and intended on applying, but said that I don’t know if I even qualify as someone who could be recommended, but if the opportunity arose for her to please think of me. It was a really well crafted, friendly message that wasn’t pushy at all.

Sophia never responded.

Remember, I also messaged Yanik after the Vegas event on Facebook and he never responded either.

At this point I felt like shit. I had built a nice little friendship with Sophia and for her not to respond meant that I totally overstepped my bounds. I felt really awkward and kept over analyzing things. I figured I must have come across as a taker instead of a giver and like I was trying to take advantage of her position for benefit. All that type of stuff.

In the middle of the whole ASM Launch debacle I also saw a picture posted on Facebook of the whole ASM crew and Sophie out on a sunset boat ride relaxing after a long day of work. Of course she would be there with them during the launch helping coordinate things. With all the rumors that were being spread and the inevitable talk about how Jarod (and Me lumped in) was trying to catch them in a lawsuit her perception of me was probably destroyed.

In my head I just wrote it all off because there was nothing I could do about it. All I could do was still apply when the camp opened up and see what happened.

Then, a couple days after getting accepted into this year’s Blacksmith Camp, Sophie messaged me! She said she had been having tons of issues with her facebook and didn’t realize I had messaged her. I didn’t even need to apply to the Maverick Camp, she would just streamline me in and give me a VIP discount price that they give the Mavericks themselves. She also wanted to put me in touch with Dima, who runs Maverick Next.

Just like that I was in!

This happened on a Tuesday. On Wednesday morning I was introduced to Dima via email and we set up a call to speak the following week. Then at 10pm at night, I randomly received a call from Dima while he was driving in his convertible to New York. He mentioned that he knew it was really last minute, but he organized a lunch with Ramit Sethi in New York on Thursday and wanted to throw it out there in case I could make it.

My dad and I have been following Ramit since he came out with his 1st book, I Will Teach You To Be Rich, in 2007. He’s one of those guys that just absolutely kills it and I have been following his advice for years. Of course I would drop everything and shoot up to New York in the morning to go meet him!

I caught the 7am train up the next day and met up with a bunch of the other Next members for lunch. Turned out that Ramit wasn’t eating lunch with us, but we did have a full hour and a half blocked out with him in a conference room on one of the top floors of a giant building down town. The conference room was leant to us by some giant real estate development company and had an amazing view of the entire city with floor to ceiling windows.

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There were only about 10 of us total so it was a real intimate meeting. He loved that we were all firing off real high level strategic questions to him instead of asking tactic style questions like “What tools do you use for X” For me personally, I had just gone through the firing process with Dorothy and was reevaluating a lot of my management techniques so I got a ton of actionable advice from him.

One of the key things he said to us that really stuck with me was “If apples don’t increase bananas and bananas don’t increase apples, then don’t sell bananas”

As young entrepreneurs we all have a tendency to dip into a lot of different things. For me personally I have been considering launching another brand for diversification. A lot of us have multiple different businesses or services we provide as well.

The key to that statement is focus. You need to focus on what’s working instead of spreading yourself too thin. Also, sometimes you have to turn down work even though it will make you money because it will not help you advance your long term goals. This is a concept that has been repeated multiple times in the last 2 books I read, Traction and Built To Sell.

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After hanging with Ramit we hit up a happy hour and all got to hang out some more. We also chilled with a venture capitalist that owns an incubator in New Jersey which was pretty cool. Then at night we had a full dinner planned and did this crazy experience at the McKidrick Hotel called Sleep No More. I never got home until around 1am that night.

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The Next’ers that I met in New York were really cool and interesting people as well and now that I’m a Next member we all talk very regularly. Matt owns a travel company that takes people on trips to Cuba (Newer company since the law changed. On pace to cross $1 million by early next year). Larry and Perry are twins that sell their own brand of Chiropractic products and they are also copyrighters. Through introductions from Next they have written copy for Eban Pagan, Ryan Deiss, and tons of other super high unreachable Internet Marketing icons. They also wrote the entire sales letter for Real Social Dynamics which is basically the dating company of Mystery from the book The Game. Daniella is tough to explain, but she does productivity coaching type of consulting. She’s 25 years old and at the time we met in New York she had just finished up at Facebook headquarters and was preparing for a session with Congress! Dimitry owns a brand of Turkish towels sourced from a small village in Turkey. Casey runs Hackathons in exotic places all over the world where programmers from all over the world meet up to co-work together and have fun at the same time. Denice runs a fairly large EDM magazine covering everything that goes on in the industry. I introduced her to my friend Pete who is the photographer that took the picture that is now the cover for Alice in Wonderland’s new album. Zion runs a suite of about 10 wordpress plugins and also does web development. He’s a “Connector” that knows everyone. He’s only 23 and he has 3 or 4 full time employees in his agency. I also met Ally, who is Sophia’s partner that helps with all of the event planning for the Mavericks.

New York was basically my interview for Next and I got accepted. Once accepted, they gave me access to a shit ton of information products on everything from copywriting, to funnel design, an entire financial education course, meditation courses, and all of the recordings for the past 9 years of the Underground Marketing Conference. I also got personal email welcomes from Yanik and each person that helps run the Mavericks. I forget her name because I haven’t used her yet, but basically the one girl is there if I ever need an introduction to someone she will try to make it happen.

The next week I had an hour long call with Dima discussing where I am now and where I want to be. He asked me a lot of tough questions that really made me think about my goals and what kind of impact I want to make on the world and things like that. After our call he also asked me to take the Kolbe Index and Wealth Dynamics personality tests.

I have taken the Myers Briggs in the past and I’m an ENTJ, but the Kolbe and Wealth Dynamics tests are much more business personality oriented. I didn’t think I would get much out of them, but I really learned a lot about myself and it put a lot of my successes and failures into perspective.

Without going into full detail about my personality results, I’m a creator. I thrive on creating new systems and solving complex problems. Once I’m done building a system however, I have very little patience to sit there and run it. I just move on to the next thing. This correlates so strongly with so many examples in Cave Tools it’s scary.

The test also told me that my ideal business partner would be an operator. Someone who can take everything I build and ensure that it is properly implemented and ran on a consistent basis.

I never really thought much about finding a business partner before, but after being in a lot of conversations recently on the topic, I’m definitely way more open to the idea. With the right operator, I think I could seriously increase my potential exponentially.

Now that I’m a Next member, I also have a new weekly mastermind group. They sub niched everyone out, so I’m in a small group with just the people in Ecommerce. Each week is a mix between accountability / getting shit done and discussing new strategies and techniques.

Group Members: Arielle is a part of Kaliedescope Global which is some type of crazy conglomerate I can’t wrap my head around. Somehow a bunch of the Mavericks combined their $1 million plus companies into some giant holding company to pool resources. They are in all sorts of niches and I even found out they acquired Jock’s (from Lithuania) business brokerage company last year. Arielle is in charge of a couple different supplement brands. The other day she had somebody else in the organization sending her a list of like 200 products coming out of Mexico that she was supposed to take and launch a new brand with. Crazy stuff. Larry and Perry are in the group with their Chiropractic products. Chris is from London and runs a $1 million plus ecommerce store of electronics products. He uses a dropship model and has suppliers all over the world that ship to the end user. He is also considering launching another business and setting up an office in India with one of his partners doing something else. There’s also Bren who is Dima’s roommate in San Diego. Bren does marketing consulting for high level type of clients and ecommerce brands. A new girl named Sarah also joined, but I haven’t had the chance to meet her yet. She’s an affiliate marketer from New Zealans.

As frequently as they can, Bren and Dima bring in super successful entrepreneurs to do private webinars with us and teach us the kind of stuff that people would never sell in an information product online. They pull back the curtains and dive deep into their businesses and strategies.

 

Webinar with Anjit – CEO of MindValley Media

The first Next Webinar I jumped on was with Anjit from MindValley http://mindvalley.com. They are based out of Kuala Lumpur in Malaysia and are currently doing about $35 million per year selling all sorts of information products. Anjit is an absolute beast when it comes to entrepreneurship. In the last 6 years he’s built 5 different 7 figure companies.

I learned a ton from Anjit on this 1 hour webinar. He spoke mostly about how to scale and automate things in your business. Basically everything in their business is templated out. He describes it as creating universally deployable business assets.

Anjit is also a huge practitioner or the business management methods taught in Traction. He went through his entire KPI process that he uses to manage all of his employees and even gave us his templates so we could use a similar system. Since this webinar with Anjit, I’ve implemented the KPI scorecard for Caecilia and Marian and their productivity and accountability has sky rocketed.

Youtube Ads Webinar with Zane Miller

This webinar was a fully detailed case study of how Zane spent $700 in Youtube ads to generate over $66,000 in sales on affiliate offers.

I’ve always known about Youtube ads, but never really gotten into them because it takes a lot of work to produce a professional commercial. This is apparently true for most internet marketers because 80% of the YouTube ad inventory goes unsold every day.

Lots of supply and little demand means that you can get dirt cheap views around 3 to 4 cents each. You can also target specific videos or even full youtube channels that you want to run your ads in front of so the targeting can be very specific.

I recently got my first campaign up and going so I’m interested in how it will perform. I’m using the video file from the infomercial and driving visitors into a 20% off meat claws coupon funnel http://buymeatfork.com

The most important takeaway from the presentation for me was he taught us how to remix videos under the creative commons license and add them to our own channels. We get about 10,000 ish views per month on Youtube based on the cooking videos I made and edited myself. It’s a lot of work to do those videos so we only do them every so often.

By searching for videos under the creative commons license, I can literally take professional cooking videos on any subject and modify them with my own branding and calls to action and then add them to my channel.  Here’s an example of one we added https://www.youtube.com/watch?v=zSeYSYECzZs

I’m hiring someone now to be a full time youtuber for me. Basically I am just going to abuse the hell out of this loop hole and have them add about 3 new videos per day every single day to our channel. We are going to cover tons of different topics and target all sorts of keywords. Every video will be overlaid with calls to actions that go into our coupon funnels for each product. It’s going to be ridiculous!

Satori Method Strategies for Higher Performance and Higher Consciousness – Tristan Truscott

Ever wonder what it’s like to spend an hour and a half hanging out with a true Zen Master?

This was a really really interesting call. There was only about 7 of us on the call so it was extremely personal. We started off by discussing the 4 aspects of healing: Conscious Mind, Subconscious Mind, Energy Body, and Physical Body. Then we went into talking about meditation, spirituality, and daily rituals and things like that.

This one is tough to write about because the concepts are so abstract, but I got a ton out of it.

Profiling Webinar with Blake Dunkley

Blake is a high level consultant that helps 7 and 8 figure businesses that are stuck and haven’t been growing for a couple years. He has an excellent track record of helping these companies break through and then as part of the deal he actually gets a percentage of their lift over the next couple years.

For this webinar, Blake was going to profile a couple of us based on our language patterns and the underlying beliefs systems that he could pick up on by the way we speak. Apparently before the call he had profiled Dima and was eerily accurate in his assessment. First up was Lawrence. Blake asked him how he would describe himself. After about 2 sentences of a response, Blake told him to stop and then went off on his assessment.

He told Lawrence a lot of things about himself and about the obstacles he was most likely facing in his video production company. To me, I’m thinking this is some type of hokey pokey fortune teller trick mixed in with business consulting and coaching. But it turned out that he hit the nail on the head and they had a super productive conversation.

After Lawrence went, Dima writes in the group chat that he wanted me to go next because he thought it would be beneficial for the group to see me profiled. I took it as a compliment, but at the same time was very nervous because I now had to be in the hot seat in a very vulnerable position in front of 10 other Nexters.

By the way I was speaking he had said he figured I had a fairly systemized business but wasn’t quite there yet with where it needed to be. I then explained to him how I had been implementing some of the principles from Traction and how it has been night and day in terms of accountability over the past month. As we were going back and forth, my key question to him was along the lines of “Do you think you can run a $100,000 company on the processes of a $5 million dollar company and a $5 million dollar company on the processes of a $30 million dollar company, or do you think it has to be an iterative process along the way as you continue to pull yourself out of your comfort zone?”

This launched us into a whole new line of conversation and he agreed with me that it needed to be an iterative process. Dima said that was one of the best questions I could have possibly asked him.

Towards the end of him profiling me he started going on about how founders reach a certain point where they need to hire a CEO to take the business to the next level because they are not capable of doing so themselves. I’ve heard this line of talk quite a few times before and instead of taking it I challenged him on it. The way I see it, there is a path in life that the CEO who takes over the large companies follows so just because the founder started the company doesn’t mean that he can’t as a person integrate those same CEO skill sets into his arsenal and take the company to the next level.

What I wanted to know was if he thought founders are typically limited specifically because of the personal connection to their own company, or if he thought it had to do with skill sets and development. At the end of the day what it comes down to is how flexible you are and how willing you are to change and adapt based on the set of circumstances in front of you.

Paying it Forward With a Webinar of My Own

I’ve always been a big believer in Paying it Forward and trying to add as much value as I can when I join a mastermind or a group like Next or Blacksmith. Sure, I could sit back and just benefit from all of the knowledge being shared, but it doesn’t hurt me to share. When you share and contribute it positions you as a leader in the group and it always comes back to you in the end.

For this webinar, I went over my entire process for tracking sales data an projecting inventory and future sales for my products on Amazon. I also provided my exact spreadsheet in a template form and gave instructions on how to have a VA automate the entire process

 

Wrapping Things up With ASM Elite

With the exception of a couple coaching calls I think I still need to do, I’m pretty much done with all of my requirements for ASM Elite. It took me about 2 days to put together all of the materials for the trainings and everything, but I’m really happy with the results. The one video in particular which I have received a ton of very happy positive feedback about was the video on setting up your 100K per month business Infrastructure. So I decided to include the video here in this post

 

 

Bulking Up Training Resource Center and Implementing KPI Scorecards

Up until this point, my training resource center has been primarily geared towards the marketing department. I’ve had tons of trainings for Caecilia regarding customer service, but they have all been scattered throughout in dropbox and various folders on my hard drive.

I took the time to build out an entire customer service training center for her now and it’s really sweet. On the home tab of her area I renamed her title as our Customer Experience Manager. Instead of providing customer service, which is reactive, she is now in charge of architecting our customer experience, which is proactive.

She now has full control and authority over which customers we give refunds too and/or ship out new products to whenever issues arise. She also has her own set of coupon codes of varying discount levels that she can hand out to customers to incentivize future purchases.

She’s encouraged to be as personable as possible when communicating with customers and to tell short stories to help relate to them whenever they send us messages. This way she is starting to create a real bond with our customers and overall increase her likeability.

While she is now writing longer response emails than previously, I’ve also given her a full set of training on how to create closed loop emails to reduce the amount of back and forth. For instance, in the past if a customer had an issue with our thermometer accuracy, she would respond by asking them if they have attempted re-calibrating yet. That would initiate a response from the customer and then she would need to respond back again as well. This interaction could take a couple days to complete, which overall increases customer frustration.

Now with a more closed loop style response pattern, she asks them if they have tried recalibrating yet and then attaches a pdf instruction guide with an embedded youtube demonstration video in it so she covers all bases and there is no need for a response from the customer unless there is another issue.

We also have an entire product specific FAQ section in there to cover every possible question customers have about each product. This section is editable by Caecilia so any time a new question pops up, I provide her with a detailed response and she adds it in.

While everything is now almost completely templated out, she understands that she can pick and choose from each response and customize it so it is geared towards that specific customer and their needs.

Overall since implementing this new system, I’ve seen a major increase in the overall happiness from the customer responses and people are way more likely to leave product reviews because they genuinely like her. One customer the other day actually responded back a couple times just because he enjoyed talking to her and he told her how he loved the spelling of her name and thought it was very beautiful.

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Hyacinth Connect also now includes a full set of training on Accounting and Bookkeeping. For a while I was hesitant to not do the bookkeeping myself because I felt it helped me keep a better eye over the financials of the company. However, I’ve been placing a large focus on only doing high leverage activities lately and bookkeeping was something that would take me a good couple hours each month to complete.

I ended up hiring a CPA in the Phillipines who is well versed in US accounting principles and does bookkeeping for multiple US clients. I created Read Only access accounts to all of my credit cards and bank statements for her so she has access to all of the reports but could never harm me if she wanted to.

When I was accepted into Maverick Next, I was given access to an entire info course on Wealth Dynamics. Basically the info course covers all of the financial knowledge you need as a business owner whether you are running a small business or a real estate investing company. There’s tons of good information in there that I am still working through.

Inside that course they also have a full 14 part video series teaching you everything you need to know to run Quickbooks. I downloaded the entire Quickbooks course (Sells for $399) and added it into the Accounting section of Hyacinth Connect as a supplement in case Liz ever runs into any snags.

I don’t expect her to need those videos that much because she works in Quickbooks every day, but the point is that all of the information and systems are set up now for me to not have to do the bookkeeping myself.

When she finishes reconciling the books each month, she saves all of the reports into my dropbox so I can print them out and add them to my hard copy financial binder. By printing everything out and adding to my binder, it forces me to review the numbers each month so I save all those hours and still stay on top of the financials.

I’ve now implemented a full KPI scorecard for Caecilia (Customer Experience), Marian (Social Media and Blogger Outreach), and Iris (Youtube Marketing). Inside their Hyacinth Connect is a full explanation of their incentive plans outlining the objective goals that they need to reach.

Each set of goals are evaluated on a weekly basis and they are given a score. Over the course of a month they are allowed to miss up to 10% of their KPIs without getting in trouble. If they miss more than 10% then they are given a warning and we set up a call to go over a plan to make sure they get back on track. If they get 3 warnings in any trailing 12 month span then they are subject to potential termination.

If they reach all of their KPIs in a given month, they are given a 15% bonus based on the wages paid during that month. Typically Filipinos receive what’s called the 13th month bonus at the end of the year. Around December you are supposed to give them a bonus equal to 1 month’s pay. This is expected in their culture and has nothing to do with performance.

In the incentive plan description, I’ve explained how we are no longer doing the 13th month because it has been replaced by the new performance based incentive plan. A 13th month bonus equates to about 8% over the year, so at 15% per month, they are eligible to receive almost double the bonus they would have received in the past.

Since implementing the KPI scorecards for everyone, accountability has been at 100%. Something I have never been able to achieve before! They love it because at all times they can view their scorecard and they know exactly where they stand and how much extra money they will earn if they complete their job successfully. When I met with each of them to review their incentive plan, I made it very clear that my job as their manager is to make sure that I give them as much help as possible so they can hit their bonus every single month.

They know exactly what their metrics are and how well they are doing so nothing slips through the cracks. Instead of me following up to make sure they are on track, they are updating me daily on their progress. If for instance, Marian is falling behind on her blogger outreach for the month, she puts in the extra hours herself to make sure she hits the mark.

By making everything performance based and objective, I now have employees working from home in a different country regulating their own work schedules and putting in as many hours as needed to get the job done. That’s fucking amazing!

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Overall between Marketing, Customer Service, and Accounting we now have over 75 detailed operating procedures accompanied by instruction videos to cover every task. The operating procedures are also integrated into our task management software Asana so they have to check off each step as they complete it so the little details don’t get skipped.

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Here is an example of the Marketing Operating procedures inside Hyacinth Connect. I use an index system for everything to make it easy to reference certain procedures. For example, all Customer Service procedures are named using Strategy ID: C#.

The only thing that isn’t fully documented out in the business right now is the operations side of things. This is a job that I will eventually fill or start to train once I hire my first American employee.

 

Exploring the world of Patents and Intellectual Property

My business is built around selling commodities. Selling commodities is extremely difficult because there is such a low barrier to entry. We have 100s of competitors popping up every day on each of our products and under cutting price and copying our listings. It’s just the nature of the game. Eventually, I know that I need to start getting into patents because it will give me full control over a product category.

I’m not an inventor, so I’ve been keeping my eyes peeled for potential patent licensing opportunities.

About 2 years ago I did some web development work for a freelance chef that does home cooked meals for wealthy families. Recently her husband contacted me because his friend Gene had developed a new product he called the Rackula.

It’s a regular kitchen spatula, but it has hook like grooves cut into the back so you can use it to pull out the oven rack. You open the over, pull out the rack, use the spatula to get your food, then use the grooved front of the spatula to push the rack back in.

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This guy is an inventor, but he has no experience or knowledge about how to manufacture at scale. We spoke on the phone a couple times and went back and forth regarding potential deal structures.

His goals were to get the Rackula in retail outlets like Walmart and Costco and he claimed to have contacts there that were willing to go ahead with it assuming he could get them manufactured. To me this was a lot of hype because he didn’t have any written letters of intent and he didn’t even have a clue about what the final cost of goods sold would be to get the things made.

Regardless of it that kind of deal was on the table, I knew I could sell them pretty well online. I started out by speaking with my Meat Claws manufacturer and sending him the design specs of the product because I know they are experienced in developing plastic molds. I quoted out the cost of developing a custom mold and sorted through different handle designs so I could figure out an estimated COGs for the product. This process took me about 1.5 weeks. During that time, he was emailing me every other day asking for updates.

I tried explaining to him that it takes some time to do the due diligence, but he didn’t get it. He was really pushy and wanted everything done immediately. He also kept trying to tell me exactly how he wanted the design to look like. This made sense because he was the inventor and patent owner, but I had to keep reinforcing that this was not a partnership. The deal we were doing was on the right for me to manufacture a product covered under his patent. The ultimate design and colors were up to me and would be determined by my assessment of the market.

Once I ran the numbers and knew that it was financially feasible, I initiated the conversation of compensation to see what he wanted. His response was that he didn’t know what it was worth and he hoped I would treat him fairly. Not the smartest negotiation tactic there, but I’ll take the leverage.

I did some research on patent licensing deals to see what the standard was for this type of thing. I also reached out to my Business Attorney to see if he was capable of writing up the contract or if he had any references for me to use. Ron had done a few patent licensing deals in the past, so he gave me some good advice such as how to limit the number of licenses he can give out to minimize competition and also adding restrictive paragraphs into the contract so he couldn’t take my packaging designs or anything like that.

Since I would be putting out the money for the mold and manufacturing the product, I didn’t want Gene to know what my final cost of goods sold was. This ruled out making the license based on a percentage of COGs. Instead, I offered Gene a fixed rate of X cents per unit.

Gene responded to my email very aggressively saying that he was upset about my offer and that all licensing deals were based on a percentage of revenue or profits on the product. At this point, he had been very pushy on time constraints and now he sent a very aggressive email instead of just picking up the phone and discussing the offer. To me, this came across very unprofessional and I knew that if we moved forward he was going to be very difficult to work with.

His concern however about basing the license on revenue or profits was valid. But it was only valid in the traditional retail sense. In traditional retail, you are selling B2B, not B2C. The Rackulas would have a set sell price and we would know exactly what the revenue/profits would be based on how many units were sold. When you are selling B2C online it’s a much different ball game.

Prices fluctuate every day and your cost per acquisition changes on every single sale. It’s incredibly difficult to determine an exact profit per sale on a product when you are running so many different advertising campaigns and each has their own metrics.

I wrote out a full explanation of this for him via email and then told him I would follow up with a phone call the next day after he had a chance to read through and understand the differences. We spoke again and worked everything through, so at this point we were pretty much down to writing up the final contract.

This whole process was going on right around the end of our infomercial test market. While I was waiting on Ron to get back to me on a couple more questions regarding the contract, I found out that the infomercial failed. I went from expecting an immediate profit from the initial order of around $20,000 to having close to $40,000 of tied of cashflow on the meat claws inventory.

Based on my financial turn of events, I wrote Gene an email explaining that I would prefer to “shelf” this project for about 3 months and then circle back to finalize the deal. Gene flipped out in another email to me explaining that he wasn’t going to let his future sit on a shelf and not to worry about ever contacting him again.

Again, this was something that I have to say I thought was very unprofessional. At no point were we in an exclusive negotiation. I would expect him to be pitching his ideas to other companies just like he should have expected me to be considering other product opportunities and have other things going on in my business. Just because the deal isn’t a go right now today doesn’t mean that it couldn’t work out at a later date if the opportunity was still on the table.

When I think about the psychology behind our interactions, I think his mindset is probably representative of most inventors. In all of our conversations he approached things with the mindset that he held all the cards. As an inventor, he’s obviously proud of his product and he owns the patent on it. But all he has is a product. The manufacturing expertise, distribution, marketing, and business skills are what ultimately determines the success of the venture.

Granted, I wanted to get in on the opportunity because it was a chance for me to do my first patent licensing deal, but In a small size company I always need to do an opportunity cost analysis and compare against other potential opportunities. For me, there are a ton of products out there that I can launch and only a limited supply of time and money to launch them.

Salad Spinner Research

At the beginning of this year I had set a goal to have at least 10 products out by Christmas time. That goal was never reinforced on a week to week basis, so I definitely let time get away from me. Instead, I got caught up too much in operations and systems building and all that kind of stuff. Those activities are very important to the business, but far and above, product development is the highest leverage activity and is responsible for growing the business.

Now that I am on this whole KPI and accountability kick, I’m starting to prioritize product development over everything else because it is the most important factor to our growth and success. Currently, I am looking at grill lights, a burger press that forms the meat for you and you can store in the fridge or freezer, and salad spinners.

When it comes to cooking tools, there are normally very few patents involved. Salad spinners are definitely the exception to that rule. I did my research and came up with a list of improvements on the current designs out there on the market. I then reached out to 5 or 6 manufacturers to start negotiations. None of them brought up the topic of patents to me in any of our talks.

After speaking with the new manufacturers I decided to also message my Meat Claws manufacturer to see if they made salad spinners as well. Mike and I already have a strong relationship so he immediately brought up the patent topic.

Salad Spinners are patented up to the hilts! Apparently it took OXO 5 years to develop their 1 touch spinner model, which is the most popular model on the market. After they developed it, everybody flooded in and started patenting every other close variation or tweak on the design that they could.

For a little bit I was scared and figured I would just move on to other products instead of mess with patents. When I was out with Casey his girlfriend told me the OXO story and said I might as well go nowhere near it because it’s not worth it. But then I figured, the reason nobody else is really selling salad spinners is because of all the patents. If I could do a design that wasn’t locked down by patents, I would at least have protection because any new comers would have to put in serious research before launching a salad spinner.

So I rolled up my sleeves and spent about 3 hours mining the USPTO for all of the patents out there on Salad spinners. There were over 63 patents regarding the spinners, 39 of which were relevant to what I was going after.

I’ve never done patent research myself before, but after reviewing a couple I got the hang of it real quickly. Patents are either Design Patents, which are about the look and feel of the product (Very weak to uphold in court), or they are Utility Patents, which have to do with specific functionalities (Aka OXO’s one touch model). On a side note, Gene’s Rackula patent is a design patent. If I ever wanted to do it, I could just make my own version with the same functionality and modify the design slightly to make it unique.

Each patent has to do with 1 specific improvement on design. To protect another improvement you have to get another patent. With this understanding, I could quickly scroll to specific sections of the patents and disqualify them from overlapping with the models I was considering. I kept track of everything in a spreadsheet with links to each patent and a short description of the core functionality that each patent covered.

After scrolling through my finished spreadsheet, it was interesting that the vast majority of all of these patents are held by only 4 companies. Progressive International, Chef’n Corporation, Lifetime Brands, and Kwok Kuen So, Kowloon (Some Hong Kong Company).

patentresearch

These are basically the only 2 types of models that I can move forward with right now.

20150723_111418Before receiving the samples, I was all about the model on the left with the knob because it is way more aesthetically appealing. However, in my testing I found that the model on the right is way more functional.

The problem with it though is that as soon as I tried it out, I didn’t understand that there was a locking mechanism to hold the handle flat. I push down on it and the plastic piece came flying right off. This is definitely a potential concern for customers so we are going to have to modify that piece a little bit.

When we finally start manufacturing these bad boys, I’m also going to have my graphic designer put together a really professional brochure style guide that goes with it. I know going in to this that my model is not going to be the best on the market. But I can still sell for a few bucks cheaper than the OXO model and use packaging and the detailed brochure guide to increase the overall perceived value of the product.

 

Run In With Meat Head from Amazing Ribs

The Amazing Ribs website gets over 3.5 Million Page Views per month and is the ultimate resource for anything and everything barbecue. When we designed our meat temperature guide we basically just looked at the guide they had and used the exact same layout, but change the wording around.

I did a ton of research on copyright law beforehand to make sure that what we were doing was completely legal and above board. Now that the temp guide have legs under themselves and are selling, we’re on the Amazing Ribs radar.

On June 16th I received an email from Meat Head (Guy who runs Amazing Ribs) freaking out and telling me I’m violating his copyright by selling our version of the guide.

I responded by telling him I did all of my research before making the guides and that temperatures fall under commonly known information, which cannot be copyrighted. Furthermore, the design was no doubt inspired by his layout, but we made modifications and changed all of the wording around, which also ensures that we are not infringing on his copyright.

I then sent him links to official documents that backed everything up and told him I’m not looking to make any enemies here and just wanted to let him know we made absolutely sure what we were doing was above board.

His response was somewhere along the lines of “You know I’m extremely angry and trying my hardest to be nice. Why would you want to poke me in the eye with a stick like this? You know how powerful I am in the BBQ world, if you want to remedy this you need to start paying me a licensing fee”

I sat on the email for a while before responding back. Legally, I’m perfectly entitled to sell the magnets and I’m not doing anything wrong. But at the same time, do I really want to bump heads with the most influential person in the entire industry. One Negative tweet to his 70,000 followers could be incredibly damaging to my brand. Is it really worth the risk when I consider how much total profit the magnets bring in?

We went back and forth for a while and finally I proposed that instead of pulling them from the market and taking a loss, that I would remove the listing from our website and then just sell out of the remaining stock on Amazon and stop making the magnets. I would do this because I agreed that the look and feel of the magnets were too close to his and I wanted to remain friendly. But, I did have intentions of redesigning the magnets and continuing to sell the new design in the future because at the end of the day, temperatures are publicly available knowledge.

He agreed and I thought everything was cool. Then a couple days later he emails me again asking where we stand. I responded by just reiterating everything we agreed upon. Then he sends another email back about how powerful he is and how I am now a competitor and one of his enemies.

This made me furious. This guy is basically trying to abuse his position of power so nobody can sell anything that he decides to claim. I wanted to just tell him to go fuck himself, but I sat on the email again and based on the advice from my dad, I just never responded.

The thing that pisses me off the most is that his entire business is built around articles and tutorial type of information. He has an information business and I have a products business. Yea, we overlap on 1 small area, but that doesn’t mean we have to be enemies. If he took that same approach with everyone else, he would be going after every single blog on the internet because he is king bbq and nobody else can write any articles. Ridiculous.

For now it’s quiet on the home front, but I know that I’ll be hearing from him again as soon as the new design gets launched.

 

More Amazon Issues

I don’t know if it was me or Caecilia, but one of us clicked on a link in a phishing email by accident. Next thing you know I’’ in my seller central back end and I see that we now have about 50,000 products listed in our inventory. All sorts of cameras and electronics products.

So I jump on the phone with support because I think there is a glitch and someone else’s back end is showing over my account. As we are mid conversation, I get booted from my account and can’t log back in. The support rep sends a password reset, which gets me back in. Then 30 seconds later I’m booted again and pw resets wont work.

These fuckers took over our entire account, changed all of the settings around and even changed all of our company policies to say that if you want to order you need to email some bogus gmail address.

I’m happy I was on the phone with support as this happened because he forwarded me over to the fraud department. They immediately locked down our entire account and made it so the hijackers couldn’t withdraw the payments balance, which at the time was around $15,000 that Amazon owed us. We then had to sit and wait for 3-4 days until they did an investigation. Throughout the investigation our account was locked so we couldn’t sell anything. Of course this happens to us in the middle of the summer. Eventually we regained control and fixed up our policies and everything again. I didn’t do the actual calculation, but we definitely lost between $5-10,000 worth of revenue because of this hijacker.

A few weeks later I noticed that Amazon kept splitting up my parent child variations. This one was totally on me. I had been exploiting a loop hole in their “SizeName” variations template. Typically SizeName is reserved for small, medium, and large versions of the product. What I was doing was selling my entire book of products on each page and classifying them under SizeName variation. Instead of “Small” my size names were “Grill Brush + Digital Thermometer.”

This strategy worked for a good 2-3 months and brought in a bunch of extra sales across all the product lines. Amazon was on to me now though so I had to fix everything up so I was in good standing. I used bulk upload templates to automatically fix all my listings and change them from SizeName to ItemPackageQuantity, which means how many units they get per order.

Instead of selling 2 different products, I could still sell different quantities of each product and give discounts for the higher quantities. This worked for every product listing but the meat claws. In the back end, there is a field for “Package Quantity” for each product. Once it is set it is stuck like that in the system. When I originally created the Meat Claws product on Amazon we put the number 2 in there because there are 2 per set. But it really is supposed to be a 1 because you get 1 box with the order.

Instead of fixing it myself, I called up support and had them walk through live with me the process of fixing the listing. The system is so fragile that even with the support rep helping me, it got confused over trying to change the ItemPackageQuantity field. The only solution was that we had to delete the Meat Claws product listing and wait 24 hours for the system to clear before adding it back in again.

We did that and lost a full day of sales. The next day I called up support again to help me re-add the Claws back in. Everything got messed up again and we had to delete the listing again and wait another 24 hours. On the third time around we finally got everything to work and get back in there, but then it took another 3 days for all of the reviews to come back to the listing.

At the end of this whole mess, we ended up losing probably about 4 days worth of our regular sales volume on the Meat Claws, which of course resulted in another couple thousand dollars of lost revenue.

This time it was all my fault though because I should have never been exploiting the loophole in the first place. Definitely makes me wonder if it really is worth it to exploit short term tactics versus playing by the rules. We probably made more money while the strategy worked than we lost in those few days of missed sales, but it easily could have been much worse.

My Quest To Become a Polyglot

For quite a few years I have thought that it would be really cool to be someone that spoke multiple languages (polyglot). When I was in Ireland I did the Irish Rosetta stone for a few months. Picked up some key words and phrases, but never got anywhere close to conversational.

When I was in Montreal, I religiously did the French Rosetta stone every day for a couple months. Again, I never gained even close to the fluency results that I was hoping for.

About a year and a half ago I read an article on Tim Ferris’s blog about language learning. In the blog it talked about this guy and how he has broken down language learning to a science. Based on the techniques he follows, he can become conversationally fluent in a new language in 3-5 months. The blog post was really awesome, so I decided to add the book to my wish list on Amazon.

A couple months ago I finally read through the book and I have been learning French ever since. So what is the secret sauce behind this technique?

First off, the technique revolves around spaced repetition learning. When you are trying to learn something, you can jam it into your short term memory with rote repetition or you can use spaced repetition to drive it into your long term memory. There is a bunch of science behind why spaced repetition works, but the idea is that you learn something and then right as you are about to forget it, you learn it again.

The practical application of spaced repetition is using what is called a Leitner Box. A Leitner Box has 7 levels to it and if you can advance something all the way past the 7th level it is mathematically ingrained into your long term memory and you will never forget it. On level 1 you learn a word. If you get it right it goes to level 2. But on Level 2 you may not see that word for say 3 more days. Each time you get it right, the word advances another level and the spacing gets longer. On level 5 you may not see the word again for 1.5 months. If at any point you miss the word, it drops all the back to the 1st level and you need to advance it all the way up again.

Managing all of this on your own would take a while and get confusing, so we use a software called Anki that manages this whole process for you. This is the core tool of the process.

Now we need to make flash cards that we will use to learn and review the words. Instead of school where you may do a full section on Greetings and then a full section on Fruits, we start off with a Frequency chart for the language. The frequency chart is the list of the top 600 ish words used in everyday conversation in the language. This way we are focusing on the absolute most important words and shooting straight for conversational fluency.

Next we need to associate a picture with each word. In my opinion this is where Rosetta stone fails. In Rosetta Stone they provide all the pictures for you already so there is no meaningful connection made in your head that links the word to the picture. Just the whole process of searching for a picture of a baseball player throwing a ball for the verb “jeter” forms a bond in your mind.

So we add in the picture of the guy throwing the ball, the word Jeter and we go to Forvo.com to find an audio clip of a French person saying Jeter. Now when we study we see the imagery, we can read the spelling, and we can hear the pronunciation of the word on each flashcard.

Note that there is no English involved at all on any of the flashcards. This is because you don’t want to be constantly translating back and forth in your head. You need to use images and study French completely in French if you want to really learn it.

The system itself is great, but what really makes it incredible is the ease of use. If you want to become fluent then you need to study a little bit every single day. I often skipped days of Rosetta stone because it’s hard to find time to sit in front of your computer to study every day. With Anki, I load everything up on my computer and then export the file into my dropbox. On my phone I have the Anki app and I just import the card deck directly from dropbox. Now I can quickly study whenever I want because it’s on my phone and it gives me reminders if I haven’t studied yet that day.

I have been at it daily for probably almost 2 months now and according to Anki, I have 592 cards in a Mature State and 459 in a Young/Still learning state in my memory. That’s a lot of progress right there! Just the other day I started a 2nd deck where I am now learning the verb conjugations. Getting all of the tenses down has been a little more difficult than just learning the vocab, but in another month I expect to be able to start putting full sentences together for tons of different conversation topics.

[Update – Writing this from Chopin Airport in Poland while waiting for my flight to Lithuania. I just left Paris with my sister for 4 days. I never got a chance to study conjugations as much as I would have liked because of all of my recent travels. However, I was very conversational in Paris and could understand and get across whatever we needed in any situation. Another month or two and I think I’ll be able to hold full conversations about a variety of topics]