The Entrepreneurial Struggles No One Talks About: $10M Case Study w/ Eric Bandholz

I had to destroy, like, half a million dollars of inventory. Late spring was like the pit of despair. The question of selling the business came up.

You got kicked in the teeth, all of your teeth. Did it ever hurt your confidence?

Yeah. I mean, like, you can't not have your ego affected by that.

I would have given up at this point.

There had to be days where you're.

Just like, this is not worth it.

The journey is the destination. I'm not doing it for an exit. I'm not doing it for a Lamborghini. I'm not doing it to be on the COVID of a magazine. I'm doing it because every single day that I show up, if I enjoy it, life's pretty good.

In this world of entrepreneurship, it is common and popular for people to talk about the wins and the sexy side of being an entrepreneur. There are very few people who are willing to talk about the downs. And as an entrepreneur, you will experience downs. You will go through downturns, you will.

Go through hard times in business.

And since so few people talk about it, when you inevitably go through one of those periods in which things kind of seem suck, you often feel alone, you often feel stuck, and you look at everybody else like they're killing it, and you're the only one who is suffering. Go to any mastermind, go to any business event and listen to how people talk about themselves or their businesses. Very few people will admit that they're struggling or that they're not sure what to do next or that they're having a down quarter or a down year. In fact, when we experience any failure at all, we tend to catastrophize it and make it mean something about ourselves and think that we have failed completely and it is all over. And that's because we have this expectation that it's always gonna be great and our life is gonna be totally different once we reach a certain level. But the truth is, there will be downturns, there will be hard times, and if you know what to do during those down times, you might be able to recover rather than riding a slow death that just eats away at your soul. That's why I wanted to have Eric.

From Beardbrand here on the show.

Eric is very honest about his rise and his popularity in the space because he was featured on tv, he's speaking at conferences, and from the outside, everybody thought he was killing it. And during the rise, during the growth, it's a fun ride to create something that you want to bring to the world. But like any business, he's gone through Hard times. In fact, he went through a period that almost put him out. It almost crushed the business. But they navigated it, they got through it and it wasn't pretty. It wasn't a new strategy that they discovered that made them blissfully profitable. It was doing some really hard stuff and making hard decisions to get the company back on track. If Eric had been in this business just for the money, he probably would not have been willing to do those hard things. If Eric had expected that it was always going to be an easy climb up, he wouldn't have been prepared to go through difficult times. But because he did, he now again has an industry leading company that is profitable and growing again. I want to bring this to you so we can normalize the fact that there will be difficult times and also talk about what we do when we face those challenges. And I hope as a result you know what to expect and you're better.

Prepared for them when they happen. It's good to see you, man. It's been a while.

Pleasure is all, man.

I like to start these interviews by asking the question, how did you make.

Your money by selling men's grooming products on the Internet. Beard care products. So we launched in 2012 as a blog and a YouTube channel, so.

I didn't know that.

I know it was a blog and audience first.

Well, yeah, and I mean audiences is being very.

Generous.

Generous, Yeah. I think we had like 300 people who were, you know, we had a Tumblr blog. So back in the day.

Tumblr blog, wow. You're old in Internet.

Yeah. So we've been, we've been, been doing it for a long time and, and then 2013 is when we launched the E Commerce side of it. I got my business partners, Jeremy and Lindsey on board and we actually started selling someone else's products. But you know, we were so new into the, the beard care space that we effectively like created the industry.

You have some visitors, you have a small audience, you have some people who are watching on YouTube. You launched the business a year and a half or so after that audience, if you call it that, is starting to pop. What was the timeline from launch to getting to the first seven figures?

We got to a seven figure run rate within that first year. So by like November or December, I think December we did like 80, $85,000 or something like that. And, and so year number two, we were seven figure business.

You've been very public, especially on Twitter in the last year so. That 2023 was brutal. And I don't know a single E Commerce founder that didn't have a brutal 2023, but no one talks about it. And part of it is because E Commerce has been, I guess, so easy for so long. And then finally we had a rough year as an industry and very few people want to talk about it. I know a lot of people went through really deep dark depressions because their businesses fell 20%.

Oh, man, I would love to have 20%. That'd be great.

But there's only a few of us who have been in the game long enough to see a few cycles. And so I'm just curious for you to share a little bit about what was going on in 2023.

When you start your business, getting to seven figures fit feels like the end goal. It's when you have made it. It's what everybody aspires to be. But as you can see, the journey doesn't end when you hit a million. You will go through ups and downs after that. And Eric got to seven figures and then the business started to slow down, it started to break. So here's what actually happened when his business started going down and what they did about it.

Yeah, I mean, it was a hurricane of shit in the fan, you know. In 2023, we. We made a series of changes. Strategically, that turned out to be the wrong decision. We changed our packaging to aluminum from glass and plastic. We lowered our price and had more aggressive margins. So lower margins in our products. We streamlined our product offering so we minimized the amount of SKUs we're carrying. We.

So you, you cut SKU count and you lowered margin. That's usually one of those. Usually people will do. Where they'll have. They'll have. They'll cut down on SKU count but increase margin.

Yeah.

Or they're lower. Lower margin and they'll increase the number of SKUs. Why did you decide to do both of those?

So.

The strategy and the thinking behind it is, or the challenge that we were facing and how we saw to resolve it was we have, let's say, utility oil. We have six different fragrances. And with our manufacturers, we had MOQs. And basically by having six fragrances, we'd have to order, you know, whatever units of each. So effectively, like I have one product, I have to multiply by six.

Yeah.

And then I get like tons of inventory.

Yeah.

So the goal is to, by cutting the amount of fragrances we'd have, we would lower our MOQs and then people would move from that fragrance to the new fragrance and then we'd Be able to churn through inventory or cycle through.

I understand.

So that was like the thought process behind it. And then in doing so, the volume increases and then we catch up on the margin as we increase the volume. But what we saw is we dropped the price and sales did not increase.

This is from a marketing perspective. Other things we did is we effectively stopped doing paid.

Paid marketing and focused on organic marketing, on YouTube as our growth strategy. And then like YouTube views like went in half as well. So it was just like it was the perfect storm. You can. Everything that I went down.

Your focus, but the things that you focused on went down.

Yes.

Instead of up. And all theory says that when you consolidate your focus into a few things should go up. Yeah, but.

Well, you know what else happened is when we did that, our manufacturers effectively doubled the MOQs.

Why?

I mean it was just, it was just everything that again, everything that could go wrong. But I think they're, you know, in their mind, let's say it was like 5,000 units. Now that I got three less fragrance, they're like, well, it's still 5,000.

So like we tried to solve a problem.

But we didn't solve the problem. And now we just offered our customers less options.

So 2023, did that end up being. Did you lose money that year?

The only year I've lost money. The other thing is Target stopped working with us. We used to, yeah, we're used to being all the targets. And they have about $170,000 of invoices they haven't paid still.

Geez. So you got kicked in the teeth, all of your teeth?

Yeah, all the teeth.

All at once.

So like, like to me, just that I'm still around, we're still in business is a testament to.

My team and, and my business partners. And then also like the conservative nature that we ran the business to be able to handle such a shock.

There was such a run up in e Commerce from 2020 to 2022. I'm curious if any of the run up and the low interest rate environment and the boom of E Commerce, did that inform any of your decisions that you ended up regretting making in 2022 and 2023. You know what I'm asking you get this euphoria of things are going so well that you make strategic decisions and then the market changes?

Yeah, I don't think we, we handcuffed ourselves too much with that. You know, we had, we had a good 2021 and 2022. Excuse me, 2020 and 2021. And then in 2022, our strategy was more like focus on the bottom line. So we, we didn't focus on growth as much. We had a great bottom line, but that was like really the start of our decline where it all kind of hit.

When you started focusing on bottom line, that's when things started to decline. Is that what you're saying?

Yeah, yeah. Because, you know, it's one of those things where you prime your, your funnel and then when you cut it off, you still have all this residual. So you're like, oh yeah, the business does great without marketing. Like, what am I thinking? Like, I don't need all this marketing just giving money to Zuckerberg. And it turns out, like, that's, you know, marketing actually does work to a certain degree and you need it.

So I mean, like, that was a hard lesson. I do think, like, we weren't getting from Google what we were putting into it. I can clearly see like now in 2024, as we've gone back onto meta platforms and growth through social, that when I spend 10,000 bucks on Meta, I will see new customers from that, whereas when I spend 10,000 bucks in Google, I don't see the same kind of growth. It's not to say Google isn't effective and doesn't work for people, but for us, the real.

You know, key to growth is meta and then, you know, like organic, of course, and things like that.

But was any of the challenges that you've run into, increased competition of other people entering the space because you were the first person on the, on the block in this niche? Did increased competition have a role in the hard times?

I don't think it had a role in the hard times because we've been having this competition since, you know, like, since we were on Shark Tank. Really. Like when we were on Shark Tank, then everyone and their mom got into the game. So it's interesting.

Moms don't usually have beards.

I know, which is crazy.

It's 2024.

It's crazy. And so, so what we realize is I don't really focus too much on competition. I recognize that they exist and that we always have to work hard to win our customers and keep our customers. But at the end of the day, I can't control em whether they're in the market or not in the market. I can recommend people if you wanted to get into the beard space, like, good luck to you because it is super competitive.

And it is a hard market. You know, like, it's not easy to win customers and they're They're. Yeah. It's just hard.

So tell me, 20, 23, you. You just get kicked in the teeth. I'm sure there had to be days where you thought about packing it in or you thought about simplifying way down. What did you go through in order to pull yourself back to at least a stable position?

So what do you do when things start to hit the fan? Most entrepreneurs will look for a new strategy for growth. They will try to spend more money to fix a problem, and it often becomes a downward cycle. I've seen a lot of entrepreneurs do this. They're so caught up in the numbers and the money and the cash flow that that's the problem they're trying to solve because they're afraid of shrinking the business or cutting back or stopping projects that aren't working well. Eric did something different. And he did something different because the primary driver of his business was how he wanted to serve his customers, how he wanted to show up in the world. There were certain values that he was not willing to compromise that created the soul of the business. That's what he was actually protecting. And as a result of protecting that, he could get back to profitability by doubling down on how he wanted to.

Show up in the world.

If this had just been about the money, if this had just been about the growth, if it had just been about the status so we could have more speaking engagements, he probably would not have been able to navigate this. So here's where Eric shares about how they cut back to the core soul of the business and how they grew from that place to get back to profitability and back to growth.

Yeah. So, you know, how we handled this is. It was really challenging on my business partner, Lindsey. She had just had her third baby in about five years, and she ran operations. And she has always been crystal clear about her boundaries in life and, you know, her priorities toward family. And I love her for that. And she felt this guilt by not being able to. To give the business what it needed in time of stress.

That, you know, like, she was looking for solutions for. For. For solving it. And, you know, like, so the. The question of selling the business came up and, you know, like, I never wanted to sell the business because it's like the worst time to sell. Oh, we're not making any money. Yes, the brand has some, you know, we have a good page ranking and, you know, all this.

There's assets, but the cash flow wasn't nearly what it was.

Right. So, you know, I did explore those conversations just to. To. To see Talked with some people kind of passively to see if there's any options, but it wasn't something I would have probably pulled from my savings to keep the business going rather than sell, because I knew I could. It may not ever be where it was in 2021, and that's fine, but I could get it to where it's making money again. And. And basically after, you know, like six months of stress.

I told Lindsay, I'm like, hey, why don't you just go on sabbatical? You know, like, I'll handle it. I've got the energy. I'm excited to work on these problems, to solve these problems. If you're ready to come back to the business or when your family's all in school or whatever, there's always going to be a spot for you here and you don't have to sell your shares to feel like you're no longer a burden. She didn't want to be a burden to the business. And I'm like, you're not a burden to the business. I love you as a business partner. And if you can't do the day to day, I'll take over those roles. So I took over those roles. She's gone on sabbatical. And we've changed a lot of kind of operational, I want to say a lot, but kind of the nuances of how we do things in the company now, everyone reports to me. So, yeah, it's been a lot of change and stress during that time period.

I think I saw you post on Twitter recently that.

Was it January. That was the first month that you saw growth?

Yeah, year over year. So, like, if I look at January 2024 compared to January 23rd or whatever month since, what was it? August of 2021. So, like, I have this spreadsheet that, that looks at like month over month growth or year over year growth on a monthly basis. And it's just a color coded like green and red. And it's just like two and a half years of red. It's like all I've been seeing is like, finally I have one cell block that is green. I like screenshot it and shared it to our team and stuff like that. So.

So it was, it was your first.

Month of year over year growth since 2021.

Yeah.

That's a long time to be seen red.

Yeah.

Did it ever hurt your confidence?

Yeah, I mean, like, you can't not have your ego affected by that.

In the first year. It's easy to justify because profit went up, you know, in 2021 profit was, we were growing a lot, but profit was real tight. We lost our growth marketer halfway through the year, and then we couldn't get those wheels spinning with our growth. That's why we shut off Facebook because we didn't have someone running it. And basically we were not spending efficiently with our customer acquisition. So 2022 was actually, even though the sales are down, our profit went up. So we had a very profitable year. Which is part of the problem of 2023 is our tax bill was huge. So, like all the cash went out when we were losing money.

So it's like, you can withstand that if the profit continues?

Yeah. If I'm making money, I don't really, like, at the end of the day, I don't really care what the top line is. I'm a bottom line guy. Like, I would rather have a, you know, like, to me, a two and a half million dollar company doing 50% profit is better than $5 million company doing 20% profit. And I'd take that all day long. Less orders, less stress, less, you know, simpler team organization, all those things.

But when your profit gets hit in 23 and you're dealing with a huge tax bill and things are going down, it's just a perfect storm.

Oh, yeah.

Of, of depression.

Yeah.

So I'm curious when you, when you.

Came back to when, when you started to kind of trim around the edges and get back to profitability and focus on the things that you, you knew you could build the business around, what was left? Because you cut Facebook for a while, you put your attention into Google, that was your bread and butter. You cut skews, but that did not have the effect that you wanted to. So at some point you've gotta start to turn the dial in the right direction. And that's usually driven by a few key activities that you can build the entire business around. So what was left once you started to put your focus into the things that were moving the needle?

Yeah. So what we had to do is around summertime, late, late spring was like the pit of despair. Like, you know, when you start losing hair and like all the bad things that happen with entrepreneurship. And you know, for us, one of our big challenges was like, we switched manufacturers and the manufacturer didn't produce the product to our standards. So in addition to all these other changes, having a product, a substandard product was also part of the year.

I would have given up at this point. I mean, I'm just putting myself in your shoes here.

Yeah.

When you're losing team and money. And then your product quality is not what you want it to be.

Yeah.

That there had to be days where.

You'Re just like, this is not worth it.

Yeah, well, I mean, it was like I said, it was. It was a grind. So. So anyways, the first thing I wanted to do was like fix a product. We had to fix a product. So we had a. In the relationship with the manufacturer who didn't produce it to our expectations. So we had to find new manufacturers. We had to reproduce everything. We had formulations that we were testing that weren't delivering on our expectations. So going back to older formulations. So like kind of clearing through that inventory and getting back. I remember the day we finally like got back to like all. We're still working through it, but like, for the most part, like all back to normal and it's just like, oh, this is great. Like, that was like a huge relief.

You mean in terms of product quality, right?

Yeah. Like our product was like we. We cleared through all the ones that didn't meet expectations. They weren't bad products, but they didn't meet expectations. So it's like just like done with that. The other thing that we did that was a big thing for us was like, we got our margins back to where we historically were. So we operated the company in a way that's more akin to a premium company versus a value company.

So did you take the price points back to what they were before you cut?

Well, all the packaging was different, so it wasn't the exact same prices, but the prices were higher. So our margins are now in line with what they historically have been. And we saw a further drop in sales, but the profitability finally was. It made sense. So we weren't like, you know, like, being able to acquire a customer now makes sense and we can do that on Facebook, whereas we couldn't with the margins that we had previously. So that was like a huge mover for us. We had to put our team on furlough. So effectively everyone but like my operations person and this marketing hire that I made were. Those were my two full time people and everyone else went halftime and we had them on furlough for I think, like, probably like three months or so.

Wow.

And I'm fortunate that none of them quit and they all stuck through it. Everyone's working full time. Well.

Most of them are working full time again. And yeah, I love my team. Like, so it's like that's the last thing I want to do is like, cut my team.

That's tough. I Mean, that's really tough when you have to have those kinds of conversations. But also, if you don't get back to profitability, nobody has jobs.

Yeah. I mean, at the end of the day, if the company's not making money, like, yeah, we gotta shut the business. Right.

So the first thing you did was you went back and fixed product. Which is interesting because that has been a theme in a couple of these conversations where when things are booming and growing, you put your eye on the things that are producing growth, which is launching new product, which is doubling down on the marketing channels that are working. And then at some point you realize that we have to come back and fix product. It's either people have caught up to us or we've compromised quality in favor of margin somewhere. And that was true with you, too. You had to come back and say, how do we fix product and how do we fix the margin on those product? And then we have the base of a. Of a business that we can start to build, but we still have to make adjustments when it comes to other expenses. So what were the activities or channels that you put your focus into that started to bring yourself out of this? Because it wasn't YouTube. YouTube's not getting reach anymore. You did you have to just buckle up and figure out Facebook ads was there, Was there something?

Yeah, I mean, it was like, I would say, you know, from my perspective, we didn't get ourself out of it through growing the business. It was entirely through cutting as much as we could. So, you know, we had consultants helping with, like, TikTok, you know, a good friend of mine, Ryan, again, and love the work he did on TikTok, but it just couldn't justify anymore. Had to cut it. You know, like, had a wonderful video editor that did great work on YouTube and had to make that cut and transition to, like, overseas talent that was more in line with the budget we could afford. And, you know, like, there's just dumb things that kind of like little barnacles that get added onto the business over time that when you're doing well, you don't really think twice about it. It's like, oh, we have this software, it's a hundred bucks a month. We have this software, it's a hundred bucks and they all kind of add up. And it's like, Whoa, that's like 5,000 bucks a month right there. We're paying, you know, like a 500 bucks or a thousand bucks a month for the Internet to our big old office. And it's like, I found you can do like T mobile Internet for 50 bucks a month. And I'm like, yeah, it's not fiber, but for two people in the office it's going to work. And then if it doesn't work then just go to the barbershop or something, you know, like don't come into the office. So, you know, kind of making those hard calls and decisions where it's like, you know, finding opportunities. My HR person, she found a new healthcare program that we had to like submit surveys of our health and stuff like that, which we never wanted to do in the past, but it saved us, you know, significant amount of money on our healthcare for our employees and stuff like that. So it was just like you really like there are so many opportunities for cutting. Like we're still trying to get out of our office. Like that's 10,000 bucks a month. I could downsize that to two or $3,000 a month and save 7,000. That's 80,000, $85,000 a year that I could either pay someone else to do things or you know, have that go to the bottom line so there's still opportunity for us to cut. But you know, as you grow and you make these decisions, like a five year lease, it definitely handcuffs you, right?

So you basically started cutting all luxuries, like all things that you make these decisions when you've got excess cash because they don't seem unwise at the time, but they're unwise if the business shrinks and then you gotta pare back, you gotta come back and just protect the mothership of profitability so that you can make the investments into things that will ultimately take you to the next level of growth. So that sounds like it was about a six month process of turning that around, is that right?

Yeah, I mean so we, I think it was June. I think it was June when we made all these big cuts. We put people on furlough. June was nicely profitable and we're a cash based accounting. So like I live and die by cash coming in. A lot of my friends talk shit. It's probably just the level of my intellectual. But.

So anyways like June made money. Maybe we lost a little bit of money in July and then kind of like up and down from like June through the end of the year. But from like June through the end of the year we were profitable. So the company was making money again. And it's like that's a long enough time frame to me where it's like we've gone through enough inventory, we've done enough that I know, like the business, the holes in the business have been plugged. Like the boat is no longer sinking for the year. We were still in the, the red. We weren't able to dig ourselves out of the hole. But, you know, like, the next step after we plugged all the holes in the boat was like, let's get some wind in the sails. And that's kind of what we're doing now. And we started to get some traction with meta and Facebook advertising, started working with Andrew Ferris.

With cost caps and kind of like this different structure for how we do ads than how we did it in the past. And we're seeing wins in that. So, you know, it's, there's, there's a little bit of optimism. Then we have like product launches here and you know, the customers are starting to get excited again and like, restocking of things that were bad are now good again. And our customers, like, so the wins kind of build on each other and you get that energy.

Yeah. It's funny, when you're, when you're killing it, those little incremental pieces of growth don't feel exciting.

The dopamine hit, just doesn't matter anymore. But when you go through the hard work of simplifying and getting back to profitability, those little incremental pieces of progress are deliriously exciting again. We did this like 2022 was my version of your 2023, or it's just everything sucks and same exact thing. We had to come back to product, we had to talk, we had to look at margin, we had to relentlessly cut things. And then when there's space again to fill it with things that are actually meaningful to where you want to go as a company, you realize that I just kind of got blinded or drunk by the growth that was happening during the upside. I lost track of what I wanted to build. I lost track of the real business. And those are the, the insights that give you the peek back to what do I really want to create, what do I want to build? And that's a humbling process. Like your ego takes a hit and some people pack it in and don't ever come back to it.

I would say one of the skills that I have is my willingness to suffer longer than most people.

I get that.

So it's like, I may not be the smartest guy. I follow Moyes, Built native and you know, Mike Beckman, Sean Frank, all these guys are building, you know, nine figure businesses and clearly like a class above me, like without a doubt. And I love what they're building.

So I know that, like, I, I don't think I'll. As much as I'd love to fool myself into thinking that I could build something like them, clearly I can't. Like, I've been doing this 12 years. Like, you know, the writing's on the, the wall, but I can still enjoy it, and I can still build something that I'm proud of and still, you know, be around people that I enjoy. And then, you know, like, if I enjoy the journey and it goes up, you know, great. That's kind of like, you know, maybe more humble externalities for what I'm.

What is driving me during, during my humble period of having to come back to basics, you start to realize, oh, Most businesses grow 15 to 25% compounded over a very long period of time, and that's how you make $100 million, if you do that at all. But we love to compare ourselves to the outliers and try to reverse engineer the outliers so that you can be one. And occasionally it happens, but it also creates this false expectation of what we can do ourselves. And if that's even the type of business that we want.

Well, exactly. Like, so, like Moyes, like, I, I don't know what his current status is, but I, I believe he was single at the time. Like, you know, I have a wife and a couple kids. And as much as I would love to work on beard brand, like, 80 hours a day, like, I, I won't, you know, like, it's just not going to happen. And, you know, so, like, understanding that, like, Elon is another perfect example. Guy's like a freaking nature. Like, I'm never going to build businesses like Elon, nor do I want to. Like, I can't imagine, like, the stress this guy goes through. I mean, how many lawsuits does he have going on right now? Like, he's just lost $50 billion. Like $50 billion because he, like, pissed off people. And, you know, in politics. And it's just like, crazy to think about, like, I would not want to build a business. So it's like understanding, like, there are trade offs to every way you build a business.

I was so glad that Eric shared this, because in our world, it is so alluring and tempting to try to mimic the results of someone else in one specific area of life without defining what we actually want for ourselves, for our lives, for the people we care about, for, for our customers, for our team members. And instead, we prioritize the ego metrics that we see the leaders in our Space getting. And I loved how Eric just normalized the fact that all he wants to do is run his race. All he wants to do is build the business that he finds meaningful to bring to the world. That, to me, is freedom. Freedom is, is doing the thing that lights you up. It's not doing the thing that you think will get you more freedom. It's not doing the thing that looks like it's creating a lot of status for someone else. It's not looking like someone you admire and trying to become like them. Unless your process is actually the process that feels like freedom to you. This is why things like having a very core customer that you're serving and caring more about them than they care about you matters. This is why being proud of your product matters. This, to me, is a beautiful example of freedom. It's showing up every day and liking your process, being proud of your work, and looking forward to. To doing the work in service to the person that you're creating value for in your business.

I'm curious if there was any communication that you had with your customer base about the period that beardbrand was going, oh, yeah, yeah. So tell me about that.

So we have a private community called the Alliance. It's. Well, we have a alliance YouTube channel, and then our private community is called the alliance, and that's where our top customers come in. So anyone who's placed three orders with us or 150 in sales, they get free access to the Alliance. But it's a private community. You can, if you want to just skip the line or never buy beard brand products, you can join for like 90 bucks.

So I, I pretty much said, like, this is our hardest year ever. I said, like, here's all the things that are going on. I'm a super transparent person. For me, it's like not. It's hard for me to not talk or it's very hard for me to lie. You know, it's like, this is the reason we're doing things. And, you know, just frankly told them. It's like, here's what happened. Like, our product was bad because our manufacturer overheated the product and that gave it the barnyard smell to it. And it wasn't, it didn't perform any worse. And it wasn't like, bad for you. It just wasn't that pleasant fragrance. So, you know, like, explain what was happening. And we had to pull a lot of those products. I had to destroy like half a million dollars of inventory in 2023. So it was just like, you know, if you Think about it. It's like, I could have bought a house or I could have bought this inventory.

The inventory is now all destroyed, and the house could still be there, but it's just like, you know, it's just.

So you were.

You were pretty transparent with your. Your strongest customer base of what you were going through and what was their reaction? Do you have a percentage of them that were really upset or most. Mostly were they.

I mean, like, you know, our. Our top customers, they get it. Like, they understand. Like, we talk a lot about, like, within that community, we talk about the hero's journey and, like, how, you know, at the. I was at the bottom of the hero's journey, the unknown or whatever, and doing it in a way that, like, usually, like, the hero's journey is about, like, growth and you're doing something new, and I am doing something new, but it's not something new that I wanted to do, like scaling the business back down.

But, like, having gone through that and understanding that you can get through it. You can resize the business and get it back to where it was. A lot of them were on heroes journeys, too, and they understood, like, the. The pearls and trials and tribulations of life. And that's our messaging. You know, it's like, keep on growing and.

You know, understanding that we're not going to be perfect.

Yeah. I'm always amazed that when you are transparent with your core group of customers how much they will rally behind you if you've been good to them in the past, that's just real community building. That's real audience building. If you're good to your core audience, then oftentimes they will be the ones that take you out of a dark time. Sometimes for me, that means that someone knows somebody who becomes the Facebook ad manager or they know somebody who is an influencer who will talk about us.

Yeah.

Or they will just tell their friends about it or buy more product at the time when they know that we're struggling. I have seen that all of those things happen, and oftentimes we're so resistant to sharing about the dark times that we don't ever give people the opportunity to help us.

Yeah. I have customers who I trust more with their, like, product feedback, like for prototypes and whatnot, than myself. I'm like, give it to this. Give it to Charlie. Charlie. And he doesn't pull back. You know, like, he cares about us and he wants us to be successful, but he's like, hey, this doesn't smell right, or this isn't performing right. And I'm like, I love your feedback, man. Like, this is because I don't want a yes man. You know, I don't want a bunch of customers that are. I mean, it's nice to have people who support you no matter what, but it's also nice to be like, here's critical feedback on how to get better. And, you know, eventually, like, one day, like, he'll be like, hey, man, come work for us and be our product guy. Because, like, I just trust him that much. He knows our products so well. He's bought so much over the years.

That it's, like, so invaluable to have customers like that who are willing to. To give their share their time and their feedback with you.

Over the years of running this company, Eric built strong relationships with certain contacts and with customers that were with them for a long time. And going back to that core group of customers is what started that swing back from red to green, meaning from losing money to being profitable again. If he was just selling product on Amazon, he would be out of business right now. This is why one of the eight milestones that we put clients through is to build an Ambassador list. An ambassador list is that core raving fan base that you can come back to, ask questions of, get involved, have them create reviews or testimonials or give feedback. It's your core group that you serve that takes you very far for a very long time. Eric did that as a result of being in business for a long time, and it was that core group that gave him the leverage to be able to get back on the road to growth. So how do you do that? How do you create those relationships with the people that will support your brand for a very long time?

Eric, you've been in e Commerce for 12 years now. You've seen several different cycles, and now as an entrepreneur, you've gone through that cycle of pairing way back and investing into things that are going to bring the company into its next chapter. You also run a podcast all about E Commerce. So I'm curious, based on the lens that you're looking at the space, where do you see our industry going over the next year to two years? What opportunities are interesting to you and what trends do you notice in our community?

Yeah, you know, it's funny. It's like, I have a really good vision for, like, hairstyles and beard styles and what's going to happen there. But with, like, E Commerce, you know, I would say I'm probably a little more reactive. I know. You know, in talking Paul with BK Beauty has been incredibly successful with TikTok shops and a lot of people are bullish on marketplace shops. So Facebook shops and Google shops. I'm not as bullish there. I don't think you can ever, you know, discount Amazon and the platform there. I know it gets really tight with like the Chinese sellers and it's really cutthroat. I do think it's, you know, to a certain degree there's a commoditization of E commerce and it's going to get more and more competitive. So.

My thoughts are your strategies as an entrepreneur need to be on how to innovate from a product perspective so that you always have.

An avenue for, for differentiating because knockoffs will come quickly. And as much as it pains me to say this realistically, you probably are not going to be the one who figures out how to produce it the cheapest, especially being in America and operating in America. So you have to win through innovation.

This is the first period in which I have seen new innovation within companies that have been selling commodities for a long time. Starting to work really well. Said differently during, during the boom period you had new companies with brand new products and they were winning in the short run but now they're getting crushed. And then you had the commodity businesses who were selling the same thing as everybody else. You had such a run up in E commerce that you could sell anything and it would start to work. But then the crunch happened and they got crushed. Now where I'm seeing some trend is you have businesses that have been around for a long time innovate on product for the first time in years and that is what is creating growth. It's almost like where those two worlds overlap. You have enough innovation to stay interesting and ahead of all the competitors. But you're not completely starting a new business with some whiz bang product that has a high failure rate. It's the first time that I've seen that sort of merging in our community.

And I'm still bullish on E commerce. I think more and more and more people are going to continue to, to buy. I think from a small E commerce business perspective the things to not think about or concern yourself with are like shipping times. Like people, if they want it quick and fast, they're going to go to Amazon. But if they want that specific product for their needs, they'll go to your Shopify store, whatever your own domain. And so like your energy, yes, it helps to get stuff out within a couple days, but it doesn't have to be tomorrow. It doesn't have to be next day. You don't have to spend your brain power on operational excellence to deliver packages. It needs to be on that innovation of the product that really drives people in.

Yeah. The other trend I'm noticing is exactly what you've done of going really deep with customer journey. It is almost community and audience is now it is a must have within a business because if you don't have that group of people that is going to support an innovative product because they've been with you for a long time, or you don't have a VIP group of people who really understand the journey that you're on. Like what are we doing here? How do you expect to compete in a competitive world when you don't have a raving fan base that you've been nurturing for a long time?

And people in our space don't want to do that because they're used to.

Just throwing up product and having sales and. And so I'm seeing more opportunity from that long term business perspective of developing very deep relationships with customers, being relentlessly focused on product. Those are the brands that are winning right now. And a lot of the people who got into this game over the last four to five years are really struggling cause they don't know how to innovate into thinking very long term on business and on product.

Yeah. You know, one of the things we do, I brought these books here. This is called the Book of Reminders. I wrote it. She's like 2018, I think is when I recorded.

Your book is significantly shorter than mine.

So it's a product of what I want in life, which I don't read a lot. So it's like you can read this in 15 minutes. But we include this in all the orders right now. So it's like this goes out to our customers. It's kind of like stoic influence, I would say.

It's not religious. It doesn't require faith or anything like that. It doesn't. It can work congruent with whatever your faith is. So I'm not trying to like convert people, but it is more of like my mindset into how I see the world and how I face adversity and how I overcome adversity and how I. I want to share those values with our customers. And it's funny because like not everyone needs this. You know, it's not like people may not be ready for at the time of their life. They may have things that are going on that are just fine. Some people may take offense to it because I do put things out there in my own way. Like, I'm. I. I swear from time to time, and I, you know, like, get inspiration from different places than they get inspiration from. But at the end of the day, like, if someone gets this and it resonates with them and it connects with them and it helps them through something that they were struggling with, then all of a sudden, you've built, like, a really strong bond. And it's that strong bond that leads to, you know, like, recommendations and referrals. And I had one person receive that. She was like, I think like a firefighters. It was like a PTSD meetup. She's like, Can I get 150 of these? Like, I want to give this out to, like, everyone who's going through this stuff. I've had people who, like.

One person, her husband was in a car wreck and all of his family member died, and, like, the guilt and the burden he had and, like, he got this and he, like, finally realized that he can leave that in the past and, like, focus on the present and being in the moment and just, like, you know, forgive himself for what had happened and how it just, like, you know, like, I get touched up, like, hearing those stories of, like, a little book like this that can have that kind of impact. And it's like, you know, like, this is not beard care. Like, this is not right.

You know, style has nothing to do with the product line of the company.

I mean, there's a little bit, like.

You invest in yourself, but that's a value, right? So, like, this is the book of values that you want to represent and you want the company to represent. And when you connect on those values, you have a raving fan and you just get to do more good in the world where if this is the book on hairstyles is just not going to connect on the same level of depth, that something that is coming from here is going to create for both yourself and the customer who connects with it.

And I think, like, from an entrepreneur standpoint, doing something like this is really hard because it's not for everyone. You know, I think, like, Dr. Bronner's. I don't know if you know Dr. Bronner's. They're in our space. Their labels are just like tons of biblical whatever. And there's.

Which is funny because they all go to Burning Man.

But I mean, it's like this thing where it's like, it does take a strong. Convicted. Not convicted. An entrepreneur with conviction. Conviction.

Which is like.

Conviction with an N. Yeah.

To stand by their beliefs and know that you are gonna upset people, you are gonna piss people off, but frankly the world means it. And then if like from my perspective, like I love this so I'm doing what I love. I'm sharing my vision with the world that I love and making a small impact on people out there and hopefully helping connect them with other like minded people through our community.

So I mean this is an old.

School form of content which is actually what built some of the foundation of Beardbrand, the YouTube channel Tumblr blog way back in 2012. I'm curious since, since you saw getting smacked on on YouTube last year with your reach going way down, what are you seeing in the world of merging content and e commerce? Where do you put your focus there during this time?

It's hard because I do think AI is going to be the future whether or not we like it. I am terrified with what that means. From like I understand SEO, like I know how that works. I have no idea how AI works. Like I have no idea how to make sure you're listed in, you know, chat, GPT or GROK or whatever is like, are they going to talk about us or not? Like if I say what are the best beard care companies, is beard brand going to show up? I don't know, like those are going to be the responses that people lean on and.

This is going to be interesting to see what happens with that. So I do think like developing content in a way that is AI friendly is going to be important.

As we go to the future. And then I do like, I love long form video. I do think there's like relationships that you can build with your audience that you just can't get. But at the end of the day you're building on someone else's playground. So there's a lot of risk associated with that. If you can do in person events, I think there's a lot of value to that in storytelling. Like we have small events where we'd have like 20 of our top customers come in and they get a haircut and we film it, we put it up in the YouTube channel and they connect and bond. It's not a very profitable thing for us to do, but it does allow, you know, like that, that really strong connection and it's great for my perspective to be able to spend time with our customers.

Well, at the end of the day, all content creation is a form of audience building, which is a form of connection. It's developing trust with a customer on their journey and whether that is 1 to 1 or 1 to 25 in a small workshop or it's at scale. On YouTube, the name of the game is how much connection can you create with the people who resonate with the values that you're trying to put out in the world. And I'm seeing more people go to Microsoft, not, not micro content like short content, but micro like small touch points, like intimate touch points. Because you can still do a lot of damage with a thousand people who really care about what you're up to. You can do a lot of damage with a few hundred people. And in a TikTok and Instagram dominated world, we overemphasize the amount of audience potential, the amount of views that something gets and we undervalue the amount of connection that we have on a one to one basis. Because even if you have a TikTok video that blows up and gets you 10,000 sales, if those people don't resonate with your values, then they're going to leave bad reviews and they're going to be terrible customers. But if you have a thousand people who resonate deeply with what you are doing in the world, they're probably going to come back and they're probably going to tell other people. And so I'm seeing more of, it's interesting. I'm seeing more of these brands blow up, but they have very short windows in which they can compete versus the long slow burn of deep value connection. No one does it anymore. No one does the talking to 25 customers and bringing them in and getting them a haircut. No one does the writing. Something is going to connect with 10% of the audience and turn them into raving fans. No one responds to emails as a founder and says thank you for buying our products. But the ones who do it I think are going to crush the brands that are coming out of the gate hot.

But even if they don't crush it, so what?

Yeah, exactly.

You build strong relationships with your customers. And you know, one thing that we're doing that took us 12 years to do is we're getting a list of our top 100 customers and going to mail them a gift, like an unsolicited gift, not one of our products, like something that we have to buy and invest in and send their way. So I'm excited to see how that goes from a connection standpoint and give them my phone number if they want to text me or whatever.

That's beautiful. Well, thanks for being an example of building a company you actually like. It's so rare in the e commerce world. That people finally realize that, oh, I'm in this game for life.

Well, if you enjoy it, then the problems are worth solving.

That's right. Give a quick plug for the, for the podcast that you want people to go to.

Yeah. So E Commerce Conversations is put on by Practical E Commerce. It's a weekly podcast about 30 minutes long and very similar to this, but run by a less competent person.

Eric, good to see you my man.

Yeah, thanks for having me.

It's kind of ironic. My book is called 12 months to 1 million, which seems like a condensed timeline, but actually when I see entrepreneurs start a business, they have like a four week timeline. If it's not working in four weeks, I'm out. 12 months is what you need in order to build a business that has long term staying power, that's profitable, that you might be able to sell one day. If you can think about five year windows, then you'll navigate those highs and lows that will inevitably come when you go on this adventure. If you think about a lifetime now, you can craft the type of life and business that you want and be in alignment with that the entire journey. When we're trying to optimize for the short term results so that we can look like everybody else, we tend to try to go really fast. Things start to break and people end up failing and they feel like a failure. But if you are creating something that actually matters to you, you will put in the time, have the time horizon that is appropriate for you to build something that is meaningful and something that is ultimately very valuable. If you're ready to start your journey, the best place to get plugged in is to download our free resources@capitalism.com playbook. That's our playbook for building a million dollar business. It's our case studies and it's our free resources that will help you on this journey.

I'm Ryan.

Danny Ryan with capitalism.com, thank you for being here. I'll see you on the next episode. Take care.

And now a quick word from Tristina Tim, one of our members from the capitalism.com community.

We joined the incubator because we knew the things that we didn't know. So we didn't know e commerce at all. And we needed that. We needed somebody to tell us where to go and what to do. Right now we are on track to hit the 3 million mark this year. However, I think next year is just going to double that. We have so many plans for the future future and just executing the plan that the incubator brought us. It was fantastic. It was step by step, what to do, how to execute it. And then if we did fumble the ball, we had somebody there to help us through it and walk us through our plans for the future. Of course, this year we have 3 million and then next year 6. And we're hoping to get to 10 million within the next three to four years. Freedom is everything to our family. I homeschool and I love that our family can wake up together every morning. Nobody's running off to school, nobody's running off to work. If I had to work at like a 9 to 5 job, there's no way that I could also homeschool. I get to set my own hours and they're not as many hours as a normal job would be. So that's really fantastic. But again, freedom is everything for our family. And I don't it's strange that our kids don't know any other way. Mom and dad are home every day. I would describe the capitalism community as family. When you get so many tips from people, we give tips and I think that we're going to start to work with a lot of our fellow community members and everyone really is rooting for everybody else. Nobody is like in competition at all. Like everyone is everyone's base as cheerleaders.

If you found value in this podcast and you're ready to go Deeper, here are three resources where we can help you. One, you can grab my book 12 months to 1 million on Audible or Amazon. It has over a thousand reviews and it's the playbook to building a seven figure business. Second, you can join our community of entrepreneurs who are following a plan to build a 1% net worth by building businesses and investing the profits you can get plugged in@capitalism.com 1. And third, if you're looking to go deeper and build a seven figure business that you can sell, you can work closely with us inside the Capitalism incubator and you can get on the waiting list and find out what we do. Over at capitalism.com inc. That's capitalism.com incident.