How Chad Turned $3,000 Into 7-Figures In 3 Years

Hey, everybody, this is Ryan. Welcome to the podcast. This is a Fire episode with Chad Magilski, who is a homegrown student who discovered the podcast and my YouTube channel and as a result started a pet supplies company with $3,000 that he put on his credit card. And he expected to learn some things and to try some things out, and two years later sold that company for a seven figure payday. And it's interesting, in this episode he talks about exactly how he did it. He talks about what he did well, what he didn't do so well. And he talks about the fact that he grew this business for the purpose of having lifestyle freedom. So when it got to the level that he could sell it for enough money that he could live on it for the rest of his life, he had no reason to keep scaling it. And so some people look at this business and they think, how big could it get? And that's awesome. I'm one of those people. But then there's most of the world who says, you know what? This is a route to freedom for me. And Chad was, I think, a really good example of someone who said, this is what I want to do and I want a specific result. But I'm also going to build a business that's meaningful to me, that's going to make a difference in people's lives, because I know that's the type of business that I will be happy building, selling, growing, and will be the type of business that has a valuation that is high enough for me to live the life that I want. Chad did it exactly right. Chad did it by having a differentiating factor in a big market. He did it by leaning on what he believed in the marketplace. He did it by building an audience that was responsive to the products that he released to the world. And he did it in a way that met his goals and his desires and his passions. This is just a perfect case study for those of you who are just starting or starting to see results from building a business or a brand. I want to give a couple of house cleaning items. He mentioned a couple of things in this episode that were really helpful to him. First of all, he mentioned that he was a member of the tribe and that was really helpful for him. The tribe has been closed for several years now, and at the time of this recording, we just reopened it. I've been really quiet about reopening it because I'm keeping it small for now. We're getting really good results for our people and then we'll really promote it loud. But if you want more information about that or you want to apply to join us? You can go over to capitalism.com tribe to fill out an application for that. It's really made for people who want to build seven figure businesses that they can sell or people who have seven figure businesses they want to take to eight figures. That's really who that's made for. Either the person who's starting out and wants to have an exit or the person who's doing well and they want to scale. So it's about scaling and building companies that you can sell also. He also mentioned this resource that made a big impact for him. It was a training called six Figures per Month. In six months is a course that we used to sell for five or six thousand dollars. It's now a free resource inside the 1%. You hear me talk about the 1% as a member's area and Chad kind of making me think maybe we should pull that out of the members area and make that a multi thousand dollar course. But at the time of this recording it is included in the members area and well, we'll see how this dates if you come back later. And it's not in there. It's because I pulled it because it's one of the most popular things that we've ever done and we there's people who say I will be a member of the 1% forever because of the value that I got from that one course alone. As the time of this as me saying this, it's a free resource inside the 1% which is $99 a month or $9.99 a year and you can grab that over@capitalism.com one that's the number one and well, depending on how many people go get it and we'll see about keeping it in there. This is a fantastic, fun, exciting case study and I really hope you enjoy this time that we spend with Chad. It takes one free person to create change. This is the show for them. We are the creators of the Free world. This is capitalism.com and we are the 1%.

Chad Magilski, welcome to the podcast. Thanks for hanging out with me.

No problem.

Congratulations. Congratulations on your exit, my friend.

Thank you very much and yeah, thanks for all the advice over the last couple years.

Yeah, I mean I know you're still under NDA or non compete or whatever and you can't talk about the brand itself but I wanted to get your journey because you're fresh off an exit and you kind of are homegrown@capitalism.com I was just Hoping that you could share a little bit about the journey with us?

Sure. Depending on how far back we want to go.

How did you get started? How did you find the plan and then start implementing the plan?

Well, it was probably about three years ago. I was working in real estate and not exactly loving it. And I don't know, I probably came across some YouTube video or something and.

First discovered the idea of Amazon private label. And that was kind of my first intro and the strategies of that. And then I think after that, I found your content, which, you know, involves a lot of that, but brings in the much more important aspect of creating your own brand and not just selling the same crap as everybody else. So I think I first found Kevin Reiser's private label podcast, and that was an inspirational thing. You heard a lot of success stories on that. And I know he had either worked with you or been one of your students in your original tribe. And then I started finding your things, your content. It was your freedom. Fast lane podcast. So this was before capitalism.com officially, I think. Yeah, listen, you know, binge that. A lot of great content on there.

Let me actually take. Take you to a moment here, because, sure, there's plenty of people who are doing something and looking for something else and then never actually plunge into it. So where did you hit enough dissatisfaction to where you're like, okay, I need. I need to get out of real estate and pursue something else? Because that's a. That's a big moment, even of itself.

Yeah, I think it was. Gosh, I don't know if it was one specific moment, but I love traveling and I love the idea of lifestyle design and all of that. With real estate.

You have some freedom because you pick your own hours, but you're kind of stuck in one location, going to closings and showing homes and all of that, and your phone rings nonstop. So I think it was listening. I'd go for walks and in the woods behind my house, listening to podcasts, and I think just hearing someone else's story of the lifestyle of freedom they were able to create by building their own business gave me enough of a push out the door. It's like, okay, I can. It sounds cliche, but trade hours for dollars for the rest of my life, or I can build something that can create income that I could one day sell and then go into passive investing. So it was. I can't pinpoint one exact moment, but it was the idea that the path I was on won't get me the lifestyle that I want. And creating my own brand and company will.

And so that's one big shift. Realizing that there's a different path, there's a different plan from what you've been doing up to this point. And then there's another big moment that happens and it's when you decide that you're going to do it and you start being willing to take imperfect action to do something about it. So where did that happen for you?

Well, I probably studied your material and some of the other material I found out there, you know, for six months or so before taking any action. And then I set aside about three grand that I was going to put on a credit card and start this company. And I figured that it was going to be a.

I don't know, I had enough confidence. I think probably because I listened to your material enough and had seen enough people succeed in this or heard about enough people succeeding that I knew that I could do it. It was one of those, if these other people can do it, why not me? And I don't know, I had the confidence to dive in. I didn't know how long it would take me to be successful, but I knew I would be successful. I think I had a good plan and I knew that I.

Was probably willing to work a little harder than most people to make it happen.

You said you had a good plan. What was the plan?

Well, creating a strong brand based around a differentiating factor that alienated some people.

And.

Had.

A difference in the marketplace. You know, again, you mentioned my NDA, so I can't really get into exact specifics, but my company name itself alienated some people but attracted those that I wanted to attract. And, you know, that was helpful. My first product was a product that I think I can say that I was in the pet supply space. I can't say my brand, but was in the pet supply space. And I launched my product with a strong differentiating factor compared to what else was out there in the marketplace. And I think a stronger brand, especially visually. Most of us in this type of business at least start out taking our sales on Amazon. And my products came in bottles and all of my competitors had a standard white bottle with a slap on 4x6 label. And I took a couple extra steps and had full body shrink sleeve things produced that looked a lot nicer. So had a visual differentiating factor off the bat and kind of rallied an audience behind a mission. We donated a portion of all of our sales to basically go fund me accounts for pets with cancer. And so I got a lot of people behind that mission. So they felt good about the purchase. They also knew that our products had good ingredients and.

You know, we're just a better option than what was out there. And was able to kind of tell a story and do a clear job explaining why our brand was different and what we stood for.

So you. You started out in a. Did you know you wanted to go into the pet supply space? Let's start there.

Oh, very early on, I did.

At first, I wanted to do the lifestyle design thing. I read the four Hour Workweek book and wanted to build that lifestyle design.

But when you knew that, did you know that you knew it was going to be something in pets? Because that's a passion of yours, Correct?

Yeah. I have two dogs who are basically my kids, Brock and Beast, and they were kind of the organic inspiration for the brand.

And. Yeah, so it was largely based around my own pets and my own life experiences and what needs my own pets had and where I saw.

A problem with the pet and a solution that was imperfect out there, didn't have good ingredients or something. But, yeah, it was something that I was passionate about.

Because of my own life and my two dogs.

Yeah, so you didn't start in the wide open west, period. So you go into a competitive market when there's a lot of people trying to do the same thing. And the thing that was different for you to start was you were willing to turn some people off. Not intentionally, not. Not by saying that a group of people is wrong, but by standing for what it is that you believe and providing a product and a brand that serves people who are in alignment with what your brand stands for. Is that a fair summary?

Pretty close. I would probably take it one step further and say I was willing to alienate a few people and stand against. Like, we had. One of our successful ads was like, hey, if we believe that pets are actually part of your family, if you think that the pet's not, you're not our customer. Get out of here. And so we were willing to piss off a couple people. And. And we did get some negative feedback, and I loved it when we did. If we got Facebook comments saying, like, oh, you're extreme. A dog is just an animal. You know, they're not part of the family. Quit saying things like that. Then our customers and our followers would jump all over that person, just tear them to shreds. And like, with how social media algorithms work, the more comments you get, the more it spreads. So you'd see our message. You'd see somebody post a comment that is in opposition to it. And then you'd see our fans just, I mean, not in a mean way, not attack them, but, you know, stand up for what our brand believed in. And that was really cool to see. So we were willing to push people away. And one other thing you mentioned that's kind of funny, I actually forgot about this until you prompted me. But the wide Open west period, I started studying your material and some of the other material out there kind of during the tail end of that. But before I launched my brand, like, I don't know, a month or two before was when Amazon banned incentivized reviews. So I had all of this strategy from what was legal at the time on incentivized reviews. And then Amazon banned it right before I was going to launch my brand. So I had to start over. You can't do any of that anymore. And had to adjust strategy. So yeah, it became a lot more dependent on the branding aspect and the difference and, and creating a story and a mission that people get behind. Like you've brought up a lot over the years.

Yeah. And you built an audience kind of as a byproduct, I think, of really standing for something. Would you talk a little bit about how involved the or responsive the audience was and how you built that? How integral was that to the overall success of the brand?

Very integral, I would say. And there's kind of a two part thing to that. There's tactics and there's the overall strategy. And I think you've been incredibly helpful with the overall strategy of audience first. Audience, audience, audience and speaking to their beliefs tactically. We used Facebook ads and Manichat to build the audience. There's also a service called Kingsumo where you can do viral giveaways that helped actually build the audience. But once you had the audience, that is the easiest way to.

Launch new products to get people behind your brand. We tied in our charity mission to our audience a lot and that was how we got a lot of repeat customers. We'd have right on our packaging, hey, send us a photo of your pet along with the product you purchased and then we will donate to a pet with cancer and reply to your email with a picture of the pet that you are actually helping with your purchase. So it was a very personal thing. So anytime somebody sent us, I mean, we got, gosh, hundreds if not thousands, probably thousands of customer photos. Actually definitely thousands of customer photos with just their pets and our products. And we were able to then reply to each one of those. You know, I had an employee or an assistant that would do that. And reply to all of the photos with a pet that we donated to that week based off of their purchase. And we got so much goodwill out of that. And the audience became stronger and it became a word of mouth thing. So that was. Yeah, the audience was a. Definitely a strong pillar of the success of my brand or my old brand.

Beautifully done, Chad. I mean, I mean you, you could not have executed the plan any better. I think so many entrepreneurs are trying to create content rather than gather it from their community. They're trying to extract rather than to create.

A lot of people are trying to come up with a random mission to stand behind because they think it's a good way to gamify sales. And you just stood for something and gave the money directly to GoFundMe accounts. You executed things flawlessly. Great work. So where did you screw things up?

Oh, geez.

Well, I'm sure there's a bunch of small mistakes. Things I could have done better or things I could have done faster.

I think in terms of since we were talking about audience, where I screwed up with the audience is I did not have a good email sequence to keep people engaged.

We had great first interaction with any of our customers who sent in photos of their pets. So we had great initial interaction. We did a good job leveraging our audience for the launch of new products. But what I should have done, and if I was to start over, I would have had some sort of backend automated email sequence built to keep my customers engaged. That's one thing that mutual friend of ours, Jason Franciosa does a really good job at and him and I have talked about over the years. Jason and I have a Skype chat every single Wednesday and have for the last couple years to keep each other accountable and help our brands grow.

Jason has actually just officially come on board as the tribe director.

Yeah, you made a good choice picking him.

He is good.

He is good people. Yes. That's something that Jason did a good job at that I wish I would have. It was. We always copied each other on a few things. I helped him with some Manichat stuff, he helped me with other things. So I wish I would have copied some of Jason's.

Ideas on email follow up to keep people engaged. That's one spot where I feel like I dropped the ball.

But even doing things on the front well, you built an audience that was responsive enough to support the launch of your other products. Chad, just for my own self gratification, I talk so much about building audiences so that you can Launch additional products to them. Would you share a little bit about what it looked like to launch a product after you had an audience of a few thousand people?

Sure. Like I said, we used ManyChat more than email. We used email a little bit too, but. And again, manychat rules have apparently changed quite a bit in the last six months. So I'm not up to date on what you can and can't do. So I guess don't take this as.

Today'S advice, but at the time you're able to message your entire Manichat list and you say, hey, we have a new product coming out. What we did sometimes is tied it into.

Our charity mission. So like anybody that sent in a photo of their pet with one of our products and we corresponded with them, showed them a picture of the pet we donated to, we knew they cared about our charity mission. So sometimes if we launch a new product, we'd say, hey, the first hundred or 200 sales, all the profit from these is going to a pet with cancer. And we just wouldn't take any profit from the first hundred sales. Fantastic. Short term, you lose some money. But in the big scheme of things, who cares? Our charity mission was something that I, it's not just a sales thing I legitimately cared about. So I wanted to donate anyway. 100 or 200 sales isn't that much in the grand scheme of things. So we'd get all of these full price sales right off the bat. These are customers who love our brand, like our products, most likely to leave us a review. You know, we're not like incentivizing the reviews, but they're people that are in love with our brand, in love with our mission. They want to support us. They're going to leave a good review, most likely. So that was how we would do that or one of the main ways we would do that and launching new products just because we had really supportive people. And it was just cool to see how much people would rally behind the mission and support the brand because of what we stood for.

And when you would launch a new product, what were sales like out of the gate?

Oh, that varied so much. We had a couple home runs and a couple that started slow.

So I'm trying to bait you here. So let me just tell you what I'm looking for. So, so, so many brands are stuck in that grind mode of they release a product and then it's like, well, we'll give away a bunch of product, we'll ask for reviews and it's just this hamster wheel. You built up a lot of momentum when you launched a product. Did you come out of the gate with hundreds of sales, Thousand, thousands of sales? Dozens of sales? What did it look like?

Probably hundreds of sales, I would say. And that did depend because we heard a lot of different things or I heard a lot of different things about how.

Amazon and Manychat and all of that always had different rules. At one point we purposely slowed down the launch. We didn't want to get all of our sales on day one. So I wouldn't, I wouldn't message my whole list on day one. For some of the later products I'd message, I think at one time I broke my list into four equal parts and I'd message part one on Monday, part two of the list on Wednesday and spread it out over a week or a week and a half so as to spread out the sales. That was a strategy at one point. Earlier on I just would message my whole list at first. We'd get a lot more sales on day one. So it really depended on, on the strategy. But you know, I think I could always count on at least 100 sales on a new product.

Yeah. And that gives you a lot of.

It gives you a lot of flexibility of what types of products you can release because you know, at the very least you're going to be able to take a few hundred sales.

Yeah.

And, and I'm curious if you ever, if that gave you any.

If that gave you any freedom to release some products that necessary didn't necessarily look good on paper. Did you ever take any strategic risks with the brand in terms of the types of products you released?

Well, not too risky. I mean I did product research or I paid for product research on any product that I, that I launched. I didn't do anything. Products that had no data behind them. There was one product that I didn't think would be a big hit. I thought there was too much competition, but I thought I had a strong enough brand and a differentiating factor to give it a shot. I guess that's the closest I got to really risky with the products. And that one did okay. It was, I don't know, a double hit. Not a home run. But yeah, I never actually mean when.

You say it was a double, what does that mean in terms of revenue and daily sales?

Oh, it probably.

Was.

A third of one of our top selling products. So take my top selling product, revenue would be about a third of that. On this other one that I'm referencing.

Is that 20 sales a day, is that 50 sales a day.

That was probably 20, 25 sales a day. Somewhere in that range. I have no clue what the sales are now. I've been out of the business for a while and don't have access to the data and who knows what the coronavirus is doing to everything. But at the time it was.

What I would call a double.

Yeah, it makes sense. Okay, great. At what point.

Did you cross a million dollars or know that this was going to be a million dollar business? At what point in the journey were you like, oh my goodness, I have a million dollar business?

Here's a plug for you. Shortly after joining your old tribe, I shouldn't say shortly after, I built the business up to about 30 to $40,000 a month in revenue.

I wouldn't say on my own, but following free content, much of which was yours. Then I joined your old version of the tribe. When I was around that $40,000 a month mark, you were doing your six figures a month and six months course that I still, I think was my favorite, favorite content out there.

And within six months I think I went from 40,000 to crossing that $83,000 million dollar run rate. Then I stabilized that for.

About a year and then went to sell the business once I had a trailing 12 months that I was happy with, where I'd get a good multiple for my exit.

So do you mean to tell me that when you went through six figures a month and six months, you crossed six figures a month in around six months?

Well, I was a third of the way there already.

Or half of the way. Yeah. Well, I'm just fishing for an ego boost. That's all I'm doing here, Chad.

Well, for your ego boost, the content was very helpful and it jump started my growth and propelled my growth.

Good.

Absolutely. That course was worth 10 times what I paid for it.

Amazing. I'm so glad to hear that, Chad. So you passed the million and you kind of stabilized for a year, you said, and then you started selling the business. So I'm curious, that's pretty fast. How long did you own the business before you decided you wanted to sell it?

Two, two and a half years.

That's amazing.

Yeah, it was pretty quick and I could have grown it and I went back and forth and I remember Jason and I would debate at one point he thought I should grow it more before I sold it. But I kind of wanted to sell it, have some funding, I could create another business later on. I could do some investing.

Yeah. And I had a little different goal than probably you're semi famous for wanting to own the Cleveland Indians. I'm more of the lifestyle design, four hour week type. I'd like to work just when I feel like working and travel whenever I want to travel and kind of have that lifestyle. So I thought that was the better play for me at the time for the lifestyle that I wanted to build.

Yeah, it was your freedom fast lane. It was, yeah, exactly, yeah. Great. Awesome, dude. So I'm curious, you went, My goodness. You started selling the business two to two and a half years in. That's incredible. So what was it like to go to market and to have people sending you offers? Tell me about that experience.

You know, it was simultaneously easier than I thought it would be, but also incredibly stressful. I went with Corin Woodmass, the FBA broker. I know you know him very well.

One of my best friends.

Yep. Corin is awesome and as is his wife Leanne. I actually met Corin at a bar, I think in Dallas. One of your capitalism.

At the capitalism conference.

Yeah, yeah, yeah. I think he might have been one of the speakers. And I bought him a beer at the bar afterwards and talked. And at the time I was six months away from wanting to sell, but got to know him and then when the time came, gave him a call. Coren was awesome. And I can't say enough good things about him and his operation. That was great. We got a couple offers right off the bat and the closing process was a pain in the ass, but that is to be expected, I guess. And there was some negotiation back and forth, but.

Yeah, I'm very happy with the end result. And.

Yeah, it feels surreal to have it in the rear view mirror. I'm kind of just, just settling down from it now. You know, there's always housekeeping things and transitional items that we had to transfer to the new owners, but kind of.

Just two and a half years to a seven figure payday is a whirlwind, man. Of course you would still be settling down. I mean, I mean, I mean, I mean your whole life. You have a whole new potential set now.

Yeah.

So that, that, that was a huge adjustment for me. I know it's going to be an adjustment for you too. I'm curious, Chad, if you could go back now to that starting point now, being through the whole process, would you do anything different or would you tell the two and a half year younger version of yourself and to do anything differently? How would you navigate it differently, being through the process?

Oh, well, you know, hindsight's 20 20. There's always things you could do better. I mentioned earlier I would have done a better job at building out an email sequence to keep my audience engaged. And there's little things like that. But overall.

I don't know.

I was pretty confident going into it. But I guess what I would reiterate to myself and to anyone listening who hasn't done this yet is that you can do it. I don't want to say anybody can do it, but just about anybody. You know, I started with three grand. I think if I remember right, you started your old company with like 800 bucks or something. If you have enough money to buy cigarettes and you have a laptop, you can create a million dollar business. Like there's, I mean honestly, like there's a, there's a sound bite for you if you want to use that. Yeah, you know, it's. We live in a really, really cool time where the Internet and E commerce and Amazon and Facebook ads and everything. The perfect storm is here where just about anybody with the work ethic and connection to the Internet can do what I've done. And certainly someone like you has done a lot more than me.

So I don't know, I would tell myself there is no reason you can't do this. And I would tell anybody else who is interested in creating their own lifestyle that there's no reason they can't do it either.

What are you focusing on next? You had a seven figure exit. You don't have to go back into real estate. You wanted the four hour work week. So what are you doing now?

Well, I've been playing a lot of video games, reading a lot of books, taking it easy a little bit. But I don't know, I'm learning a lot about investing.

As we record this, we're in the middle of the coronavirus thing. So there's some interesting plays in the stock market right now.

So I'm kind of in the education stage where I'm learning about investing, learning about real estate investing. I purchased a course from, I forget the gentleman's name, but another friend of yours, Shaquille, I think about business buying.

Shaquille Prasa. Yeah, it's a course inside the 1%.

Yeah, I'm going to go through that. I'm a current member of your 1% group.

I'm kind of gathering options for what to do with the funds. You know, I don't want to work 80 hours a week, frankly. I want to be a little lazy and enjoy my lifestyle. So I'm looking at investing for mostly passive things. I may start Another brand unrelated to my previous brand, but I might look for a partner and be more of an advisor and fund the brand.

I'm not in any hurry to jump into anything, I guess, to kind of dip my toes in a few things, make some wise investments. You know, I'm far too young to retire, retire, but I want to kind of be semi retired for the rest of my life, to be honest with you, and work when I feel like it on what I feel like working on and not.

You know, not be on someone else's time schedule.

How old are you, Chad?

34.

All right, so Semi retired at 34. Emotionally, how do you feel on the other side of this?

Pretty good. I feel.

A sense of accomplishment, but I don't want to.

Get prideful or anything. I know that there are a lot of people that have accomplished a lot more than me, so that keeps me humble. But I feel satisfied with what I've accomplished. I think my brand did a lot of good in the world. We donated a lot of money and helped a lot of pets. I was able to create the lifestyle that I want. We can travel whenever we want.

So I feel like I created a life that I wanted for myself while also benefiting the community around me.

You did.

You know, I think when capitalism is done right, that's what it can do.

That's right.

So, yeah, I emotionally feel pretty good about it.

Good for you, dude. Well, I am. I'm so. I can think back to when we met, and I think we met at a tribe event or a brand builder event a few years ago, and you were, you know, you were. We were having a couple drinks, talking about politics and religion.

Yeah.

And you were, you know, scaling this thing and in the grind of it and loving it and excited about the growth. And to be. To be through that process as quickly as you did is something to be very proud of. And I want to remind you, I just feel called to remind you of something. Your contribution to the growth of the world didn't end when you sold the business because now you're 34. You've got a good 60 years left in you. For the next 60 years, you will never have to operate from the place of taking from others. You'll be able to be in that mode of creation and ownership and service for the next 60 years. Those ripple effects are huge, man. They're huge. So I just, I just felt compelled to tell you because first of all, I wish somebody had told me that after my exit. But also for you, like, I can tell you're Like, I feel pretty proud. It's like you are just getting started, my man.

Yeah, I appreciate that. And I feel. I don't know, fortunate is the right word, but.

Happy to be in the position that I'm in right now with the virus and everything going on. Like, I can help loved ones that need it right now, and that's a good feeling.

Where, you know, I can be looking out for those around me, too. So that wouldn't have been able to do that before. So that's. That's nice as well.

Well, Chad, I just want to say congratulations. Thanks for following the process and for being so edifying of the process. It means a lot to me, and I just have a feeling that a lot of people are gonna listen to this and go, all right, if Chad can start a business with $3,000 and just go for it, I'm gonna go for it too. So thank you for inspiring the next generation.

That's what I hope to convey. A lot of people, I think, are told they can't do it or told something's holding them back, and it's. It's nonsense. Anybody can, or almost anybody can do it.

Amen, brother. Thanks for hanging out with us.

All right, thanks, Ryan. Good talking to you.

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