Areas of Expertise + Is This Info Helpful?

Business Brain the Entrepreneurs Podcast Episode 410 for Wednesday, December 14, 2022. Greetings folks and welcome to Business Brain, the show by, for and about entrepreneurs. It's where we take our business brains, flawed as they might be, and apply them to all of the things that we do throughout our lives, our businesses, our personal lives, everything, just to better understand and better leverage ourselves as we move forward. Sponsors for this episode include Shopify. Go to Shopify.com SBS to get your 14 day trial and full access to their entire suite of features. We'll talk more about some of those features in a little bit. For now, here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean.

You know, Shannon, we were having a conversation before we hit the record button here that I want to have here. We were talking about some friends of ours, at least some friends of mine. Yeah. That have had businesses that started and were run for very long times, as, you know what I call our kinds of businesses. The kind where you're a small business, you're doing the work, the founder is there obviously hiring a team eventually and all of those things, but grunting it out and really being involved in the day to day and the grind and making it happen and yes, earning a living for themselves and a comfortable living and all of that, but really involved. And there's two examples that, that we were talking about here that then pivoted and wound up taking massive amounts of investment money. And the two companies are Text Expander, formerly Smile, which was formerly Smile Software. And we even had Greg Scouten, one of the founders here on, I think it was called Small Business show, but here on Business Brain back a number of years ago.

And they were a longtime sponsor of the show too, correct?

Yeah, that's right. They, yes, they were one of the first podcast sponsors we ever had. Yeah, I still use it. Yep. And another product that I use where I know the founders of the company, it's the 1Password people. But earlier this year, the Text Expander folks, they had sold off other products that they had. They, they really were sort of a small business software house. They had textexpander was one of their things. I believe they acquired it and then just, you know, kept working with it and building out the model. We had Greg on the show when they moved to a subscription pricing model, but they also had like PDF, Pen was theirs now that's owned by Nitro and other things that they either sold off or just sunsetted over the years. Textexpander sort of became their focus. And they brought in 41.4 million in funding earlier this year. And then. And like, not that earlier, like July of this year. So the economy was already. The investment part of the economy.

Money was getting tight already.

Tight. Yeah, yeah, yeah. And then. And then Greg and his business partner, Philip, both are now. I don't know if they're out, but they're like, they're transitioning out. You know, it's. It's clear. At least I believe that to be the case. And then there's the folks that. That did one password, another piece of software that I use. Another piece of software. Another company where I knew at one point in time, I knew everybody that worked there because it was small enough. And they closed their Series C funding in January of last year, end of January last year, and that was $620 million in Series C. And they said that in the past year, they had pulled on a Series B when their customer base was at 90,000, and now it's more than a million. So they're clearly using the money well to grow. And this is fantastic. Like, I'm. I'm super happy for my friends here.

Oh, me too.

Like, there is no envy or jealousy or anything. And. And that's what we were talking about is they took their small business and changed. They pivoted. Right. And maybe they brought in. And I don't know. I think with one password, I know more because it's been longer that they've been in this world that they brought in a CEO that sort of lived in this world. I don't know what the TexasPander folks did. I don't know how it all transpired. Might be interesting when he can, to get Greg to come back on the show and talk through this, but at least based on what I know now. And I reserve the right to change my mind, as always, but I have no. Like, I love the money. Like, the idea of having that kind of money is fantastic.

Oh, it's. Yeah. But like I said, there's a. There's a price to pay for that as well. And I'm not sure. I certainly don't want to pay that price now at this stage of my life, but I know nothing about that. That pivot from, you know, you're got. You're running a great business. You got 10, 20 employees. You're doing well. You're building wealth for yourself. You're kicking off some revenue, buying some investments and starting another company. I could talk about that stuff every day. Come talk to me about. Okay now we want to go out and raise whether it's. It could have been 41 million. It could have been 41 billion for all I concerned. I have no idea. I'm not the guy that can talk with that talk.

Right, right. No. And it's fascinating to me. But what. I guess what's really fascinating, when we started this show, it was your idea. Full credit. And I like the idea. This is not a blame thing. This is. This is a respect thing. Yeah. It's your fault. That's right. But you said to me, you're like, look, I. I can't find. And this is a great catalyst to starting any business. You said, I can't find any. And. And then you finished the sentence. But as soon as you said that, I was like, oh, whatever. He's gonna say, I'm probably in, because I know what this is. Like, I want it.

There's lots of business or lots of podcasts about this kind of stuff.

Startups and VC funding. Yeah. And you said, once you've been on.

Fire and these kind of things and they're tallying up these huge numbers, that's great. And again, it's good for them, and I'm glad they're successful. But what I couldn't find was a podcast for a person like me that showed up every day, that grinded it out, that, yeah. Took it to a certain level. You know, revenue of, you know, maybe a million bucks a month, that kind of thing. But then steadied it out and kind of got these companies in maintenance mode and then went and started another company. I couldn't find anything like that. That's why I came to you.

Yeah. No, and it's great. Like, when you said that, I was like, yeah, I don't know of any shows like this. And so we've. We've done this for now for almost eight years. And as far as I'm concerned, we don't have any plans to wrap it up anytime soon. But having it, I never. It's rare to encounter the company that runs for a while and then pivots into the VC space. Like, usually. Right. Usually it's. It's one track or the other. And rarely do you find somebody that. That really, like, decided okay, and who. I don't know the decision process. And that's the part I'd love to dig into with Greg. I mean, we. I'm sure there's specifics of it that. That are under confidentiality and he would never be able to talk about. That's totally fine. I Want to find out, like, what happened in your brain, like, when did you. And how. Like, how did you change that mindset? Because I don't understand that. And again, I ask it out of curiosity. Sometimes curiosity forces me to change my mind, but it's mostly just curiosity from the sidelines. I don't think I want to go down that path. I had. I had one business where we started doing that, and that was the one where it sort of blew up into a huge lawsuit and everything. But, I mean, it was never at that. Never at that.

If you've done this, if you've had a business and pivoted like this and then brought in a ton of money and then, you know, come on the show and talk with us, you know, feedback@businessbrain show.sh o w and, you know, we would love to learn more and, you know, hear how you did it and what was the impetus. And I think it's great. I think we should talk about this brewmate concept as well, Dave, that you sent over to me, because I think it's kind of related. You want to roll into that.

Oh, hey, I know what that means. That means it's time for us to talk about our sponsor, Shopify, because that is the sound of another sale on Shopify. This is the kind of notification that we love here. Shopify is the all in one commerce platform to start, run and grow your business. And Shopify makes it simple to sell to anyone from everywhere. Because with Shopify, you'll create an online store in your vibe and then you can discover new customers and grow the following that keeps them coming back. Shopify's got all your sales channels covered, so your business keeps growing. You want in person POS system.

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All in one e commerce platform, they've got that too. Even across social media like TikTok, Facebook, Instagram. Shopify's got 24. 7 support and free libraries full of educational content. And that's how you know that Shopify's got you every step of the way. And this is how every minute, new sellers around the world hear that sound for the first time when they make their first sale with Shopify. And you will too. Just like we have Shannon and I. We've used Shopify for a lot of different things because they make it so easy. You do what you do right. Your business does whatever it is your business does. Shopify takes care of this part so you don't have to. It's great. When you're ready to launch your thing into the spotlight, do it with Shopify the commerce platform backing millions of businesses down the street and around the globe. Sign up for a free trial@shopify.com SBS free trial. Go to shopify.com SBS to start selling online today. Again, that shopify.com SBS and our thanks to Shopify for sponsoring this episode. All right, so yeah, there's, there was this thread I found on Twitter. I, I feel like there's a, you know, this is like a guy walks into a bar, right? It's like this is the beginning of, of many. That's interesting.

The current one.

Yeah, yeah, that's the current one. At least for, for business brain here. There was this thread I found on Twitter and it was from Alexander Volodyrsky and he said he started the thread. Dylan Jacob made 20 million in revenue in two years with zero full time employees. That's pretty good. Then he hired a small team and scaled it to 150 million in five years. The business adult beverage cans two and a half million customers, a million a month in traffic. And the company is Brumate. B R U M A T E I wound up with one of their like, like coffee, like travel coffee mugs, you know, insulated travel coffee mug kind of thing. And I, I, my wife thought it was the stupidest company name in the world because it's what brumate is what like lizards do when they like hibernate. They don't hibernate.

It's not brew, it's not brew mate. Like br, you know, is it brumate or brumate?

I don't know, I'm probably pronouncing it wrong. Yeah, it's B R U M A T E so I don't know. I don't know. Yeah, I don't know. But like it, it, it's, but, but it's, it's, it was an interesting thread. I don't, it is, you know, they, they talk about they've got150,000 five star reviews. And, and it's the coffee mugs, coolers, you know, other hydrations like wine and beer things, whatever. And Alexander goes on to talk about how things started and he says at a party, the founder, Jacob was drinking beer. Forgot about it for 15 minutes, came back to warm beer. Okay, maybe he just needs to get higher quality beer so he doesn't, he doesn't care if it gets a little warm. But you know, whatevs, there's, it's. I, I'm gonna take us on a tangent here. I love the overly complex solution to a simple to solve problem, right? Like, this would have been just fine beer that, that you like when it's warm and everything's gonna be fine, you know. But he didn't, he went down this other path and created a company about it. Don Leslie was a speaker manufacturer. I think he certainly was. In the story I'm going to tell, The Hammond Organ Company released their B3 organ. This is back like in the 60s. And he didn't like the sound of what Hammond called percussion on the organization, where when you hit the keys, it would make this clicky sound. And instead of just buying the prior version of the organ that didn't have percussion, or I think even at that point you could buy a B3 without the clicky sound with a switch to turn the percussion off. Instead of doing that, he decided, well, if I got two speakers rotating out of phase with each other at different speeds, that would maybe sort of mask the sound of the clickiness and maybe the organ would sound better. And so, so instead of just buying a different organ, he built what's what now is called the Leslie speaker. And it is the classic sound that goes along with any like, rock and roll organ that you hear. Go listen to Deep Purple or something, you'll hear that like warbly, like almost distorted, heavy, like lead guitarist style organ. And that's because it's those two speakers, you know, one high frequency speaker rotating in one direction, low frequency speaker rotating in the other. So I, I love stories where somebody finds a massively complex solution to a problem when Occam's Razor could have easily saved them lots of time, but they created a business about it. Right. And maybe that's what attracted me to this, this thread. Because this is like, dude, this problem's solvable, man. Like, this is a solve problem.

It is, it's. It's interesting. I, I have, and I like the story and, and the concept and I'm, I'm all about celebrating success like this. I think it's great. But I also, I, I think there's a downside to these quick threads, quick stories is you get somebody looking at this. I don't think this is a motivator to go out and start a business.

Yeah. And I mean it was, I don't, don't get me wrong.

For him.

For him. Yeah.

Reading this, this thread. I'm talking about reading this thread. The way that Volodyrsky has put it together.

Yeah. Yeah.

And the reason why is it, or, or if it does motivate people, I think it's a recipe for Big disappointment. And I'll give an example. So in the, the second part, he says, you know, to validate product demand, Jacob brand Facebook pre order ads. 7,000 people signed up. Okay, that's not easy. That's not an insignificant thing to do yet. It's kind of tossed off, you know, And I know it's Twitter and he's doing this thing and that's great, but.

It. 7,000 orders for nothing. Like there's no product, there's no reviews yet. Right. Like this is just nothing. He created a Facebook ad.

How?

I, that's the part of this that I want to dig into is how did he. What was the ad? What, how did that work? Because that's the magic here. Because without that, the rest of this doesn't work.

No. Well, and then again, there's another one down, you know, next thing. Okay. Influencer market. Jacob partnered with influencers and blog owners to promote his product. Well, if we said that our, as our current or recent listener feedback has been, it's like, that's too vague, you know. And I know it's Twitter, but maybe it would be great to link to a deeper breakdown of how this stuff worked if Volodyrsky is really trying to help other people go out. I'm not sure he is. I think he's a, he's actually like a Twitter marketing guy, I believe, and trying to show you how maybe you could work and gain followers. And that's great and I respect that. But as I read it, I'm just like, boy, you know, this is not easy. I've done this stuff and it takes a ton of work and to end, to start.

And it doesn't always work. Like you don't always have success. Most of the time.

Most of the time. And where I like the intro thing. And again, I know he's trying to pull people in, which it does, you know, you know, 20 million revenue, two years, zero full time employees. Well, is there a whole team of contractors out there? I mean, I, you know, you just.

It.

There's more to this story. And this reminds me of some of these, you know, like we were talking about earlier, entrepreneurial podcasts or grow your business so quick and it's so easy. Just buy my whatever and I'll tell you the secrets. There are no secrets. There's day in, day out learning, you know, resources, just like we talked about. It's a long grind and many, many people up too soon.

Yes. Oh, well. And I mean, yeah, there's not enough here in this thread. Yeah, like the Details are missing. It's not useful.

It's kind of cool to read about this guy.

It's a story, bro. That's it.

But it's not useful for a business owner or an aspiring business owner to jump in and say, hey, based on, look at this guy did. This is a recipe to fail and burn a bunch of money. And if you don't understand the game, you don't know that, you know, he may have, and I'll speculate here, hired a Facebook ad agency to manage all these pre order ads and to get 7,000 people to sign up. And how much money did that cost? You know, did he spend 50 grand to get 7,000 people?

Right.

Yeah.

What was, what was the actual formula? Yeah, yeah, yeah.

So I often feel the, and I like these kind of threads and I like reading these blog posts and all this kind of stuff. But I've mentioned this before. It's kind of like you're watching them build the airplane while you're sitting in economy and you're like, well, is this, you know, what is this doing for me? And are we going to crash or is this. So I'm not sure how useful it is other than getting traffic for Volodyrsky and helping him, you know, build, build his following his business, which is awesome. It's great and it's a good story. You know, I, I think that, I think it's interesting. I would love to hear what our listeners think about this. We'll, we'll link this in the show notes at BusinessBrain show and you should go listen to it. If you're in your car or you're running around, listen to this on your phone. Go to the website, you may have never been there, and click on the, on the podcast and go and look at the notes. Click on the. Read this thread and tell us what you think and if this kind of thing is helpful for you or does it kind of make you frustrated a little bit or may perhaps. I hate to use this word, but I get the feeling it's just not as genuine as they would like it to be.

Yeah, well, yeah, the story is true.

Yes, it is.

It's missing details. There's a lot that's glossed over. But even if, like, if we had the details, I guess if we had the details, the details we want. It's a book.

It's not.

Yeah, it would be a book. Right, Right. But there's certain parts of this that would be really valuable to dig into and they're glossed over. It's Just like, oh yeah, you know, he had this idea and he grew it. It's like, oh, cool story, bro. Like there's nothing useful there. Yeah, yeah, yeah, yeah.

What is the, like it's almost. If I was putting this thread together perhaps like what. Maybe in the first thing where he talks about, you know, 20 million, two years. It's a lot of hyperbole but maybe he should have. Here's the takeaway. What is the takeaway? You know, how to use, how to leverage outside consultants and not hire a bunch of people. How to use social media. I don't know what he's trying to achieve here.

Yeah, yeah.

I don't know. Other than maybe Jacob's. Maybe Brewmate is his client and he's helped him perhaps. But I, I just followed him because it is an interesting story and he's got lots of other interesting stuff up there.

But I, I, you know what I would like. If you're going to go to the website Businessbrain show and read a Twitter thread, I'd love for you to read ours. We did our first Twitter thread this week. 7 Ways to Find Opportunities in a Recession. I would love to hear your feedback on that too. That would be. Yeah, if you're going to read one.

Thing, tweet it to your.

Yeah, well, if you like it. Yeah, retweet it for sure. Yeah, yeah, yeah, that's good.

So yeah, I mean just take away. I'd love to get that feedback. I think it's interesting. It, it kind of reminds me of this when we first started talking about these scaling, you know, this massive scaling and investment venture capital into these business. I really don't know much about it. I'd like to learn, love to talk with somebody about it. Come on the show and talk about it and you know, maybe we should reach out to know.

Yeah, yeah, yeah.

Find out.

Yeah.

You know, anybody that wants to come talk about it. But we have more to talk about in the bev beverage industry. But we're going to wait till next week and talk about two Buck Chuck and how a guy built a billion dollar business on top of a two dollar bottle of wine, which I thought there's more detail in, in that article which I thought was pretty interesting.

Yeah, we actually have details to share. Yeah, we do.

And we're going to talk about kindergarten garden lessons, aren't we?

That's the plan. Now there's a lot of times when we have plans a week out and then it's time to do the show and we realize, wait, there's something else we're going to talk about.

Well, I think it's good to mention it because today it is really important. Yeah, like today that's true. It goes, but it's, it's good. Not so structured.

No, it's not so structured. Yeah, I, I, this episode was about something other than what we had planned. Well, we had lots of things planned and we only wound up doing two of them, which is normal. But it's not the two I thought we were going to do. That's fine though, for me. Hey, thanks for hanging out with us for the last 20 minutes or so, folks. FeedbackUsBrain show is where you can get in touch with us. Businessbrain show is the website which has all the links to the things that we just talked about. And make sure to visit shopify.comsbs and keep living that charmed life. We'll see you next week.