A recorded Tribe Hangout led by Ryan Daniel Moran (with Sean Coyne, Brian, Darren, Kurt, Bahram and others) focused on selling and scaling Amazon/physical-product businesses. Key points: a buyer (an $80M language-learning company) sought to acquire Amazon businesses to diversify into physical products; Moran and partners sold a majority stake while retaining ~25% equity, receiving modest upfront cash plus monthly payouts and continued cash flows; buyers value internet/Amazon businesses on trailing-year profit multiples (not revenue), prefer consistent year-round sales, low regulatory risk (avoid hype supplements), and "boring" consistent businesses; controllable assets (customer lists, distribution channels, automated processes) raise valuation; operational advice covered guarantees, Amazon vs. off-Amazon refunds, collecting customer data (Facebook, inserts, call capture), and multi-channel/wholesale sales opportunities. Several tribe members shared updates and asked practical questions about exit planning, valuation, and fulfillment.
Chapters
Live. There we go. Okay, now we're good. Let me just make sure the chat roll is going.
Should be good.
Come on.
You know, I was telling Sean before the call, we've been doing this for two years and Google Hangouts is still confusing for some reason. There's always a delay online. The tribe meeting link, for those of you who are watching on the broadcast, goes live. So it's a little bit confusing and I have to worry about starting on time. But yet some people, I'm not sure if they're actually seeing it. Yes. Okay, now we're good over here. Okay, so would you guys do me a favor? If you're watching on the broadcast, just let us know that you can hear us because it's sometimes a little bit of a joke. So we're here with our neighborhood friendly Sean Coyne, and today we want to kick things off before we go into Q and A. We want to talk about.
Our business purchase because we are selling our yoga company now. We want to go over a little bit about why we decided to do that, what level we needed to be at in order to negotiate that deal, and why you might want to think about your strategy now, even if you're just starting your business. So we got approached actually at the ASM conference, the last one, by a company that is buying Amazon businesses. They were interested in a couple things. One they were interested in, actually their business is they have one core business, which is language learning, and they've grown that to an $80 million a year business. And they wanted to diversify into some different areas. And what they really wanted to be in was physical products, but they didn't want to start their physical products business. They wanted to buy other people's physical products businesses and have a holding company for all of these different physical products businesses.
So what they were looking to do were to buy.
Amazon and they approached me a couple weeks ago.
You guys are noisy today. Google Hangouts is clashing on all of you.
Brian and Kurt, you're the only people. And now everybody disappeared. This is the most live. We are five minutes in and we have offended half of the tribe already. I'm not offended. You're offended too, Ryan.
No, I am not offended.
Okay. There's very little we can do to offend Brian.
So what you don't know is that neither of us are wearing pants. That's why this is a waist up hangout right now.
Oh, we offended them. No pants Saturday. That's what it's.
I was just saying. Stop there.
Don't go Any further.
The fun is just beginning.
Yeah, we just had our coffee. Shawn's having more. So we're just. More. Okay, we're boring everybody. So this company was buying multiple Amazon businesses. They wanted to use one of mine as the example so that they could actually one of their motives in working with us was that they wanted to be in a position to be in front of the tribe because we are the most successful. We are the, like our group is, is as far as I know, the most successful physical products business. Like what would you call it? Think tank. The most successful physical products think tank ever. And that's.
The subset of being a part of asm, the most successful physical products training ever. And because of that, they wanted to be in front of this group of people. That was part of their motivation. The other was because we had built up a good company that was growing and they were interested in.
Being in the yoga space. I met with them in person a few months ago and we sat down and went over several different options.
Here are your writer downer points. As far as.
Companies who are buying physical products businesses, what they're looking for when they buy these products, first they are looking for consistent sales and that gets reflected in year long sales, meaning it's not a seasonal product and meaning that it is not some sort of hypey. It doesn't sort of hypey Dr. Oz or Oz.
So it is a year long.
Somebody's echoing bad.
And that is.
Sorry, one of you is echoing.
That's true. Okay, there we go. So they look for year long consistent sales. They're looking for growing trends and they're looking for markets that don't have potential legal problems, meaning something like.
Hype supplement. Hype supplement. Yep. It's you, Kathleen. It's happening. Echoing with crazy echoing.
Wow.
So they're looking for things that don't have regulation problems, meaning there's not a problem with potential FDA changes or the FTC coming in and cracking people down, because those are business killers. So they are looking for consistency because anybody who buys a business is buying on the present income with the expectation that that income is going to continue and will continue to grow. So those are the things that are important to somebody who's acquiring businesses. One quote that they used with me was we love boring businesses. We were actually talking about one of the businesses here in the tribe and.
They were like, yeah, it's a really profitable business, but a really boring business. And they said we love boring businesses. So the model of looking at what has been popular for a Long time. And selling that better is a very attractive one for selling a business. So let's talk about the reason why you would want to sell a business. Because when you sell a business, it's kind of a.
Someone'S got children in the background. That pause and all the phone is, please mute yourself if you have children.
One of the reasons why people think they want to sell a business is because they're going to make millions of dollars up front. And for us at least, that was not the case. So our upfront cash was very modest. It was a fair evaluation, but it was a very modest. So we went back and forth for what has it been, like three or four months now in negotiations, and we've reached what's fair but modest. So Sean and I are not going to be retiring to the beach on this deal anyway. But what was worked into the deal was something much more substantial, which was the reason why we decided to sell this business. The reason being, first of all, we sold. We sold a majority stake in the company. So we maintained some equity in the company, and.
That was the deal maker. We got to hold on to equity because if we were selling the entire business for the numbers that we got, we probably wouldn't be that interested. But since this is a much larger business that has a huge marketing budget that is going to be growing the business, the amount of equity that we are holding onto may outgrow what we have currently owning 100% of the business. So our business is worth $100,000 per se, and then we hold on to 25% of the company, and that company grows 20x as a result of an $80 million business buying it and growing it. Well, then our equity in the 25% is worth more than the hundred percent before. So that's one reason. The second reason was we did get a modest amount up front.
And that's going to pay for all of our inventory, all of our investment, and give us some profit leftover. And the third was there's going to be monthly payouts for at least a year. Luckily, it's the dog hour here on the tribe. We don't have it.
I just noticed that, well, last week we had the baby hour.
This week it's the dog hour. Next week it'll be the spouse hour.
And then we can have a cat hour. Joe Gianfola and myself and Greg combined have about 94 cats. So that'll be. It'll be the cat hour in two weeks. You're here in an hour. Two weeks from now, it's the cat hour. Anyway, we might have to change that date. I'll be traveling anyway. Back on track. So we're getting monthly payouts as part of this deal and we get cash flow from the sales. So our equity is also a cash flow piece. So it is not just this clean. We got a whole bunch of money and went on to the next thing. It's a combination of things. We got some money up front. We are getting monthly payouts because we are staying on in an advisory role. We are getting the cash flow from the actual product sales and we maintain equity, which we hope is going to be worth more than our existing piece now, plus, our time to working on a business goes to almost zero. It goes to our Saturday breakfasts. That's what it basically comes down to, where we plan out what we might want to advise this company on. Our work gets put down to zero. Our cash flow stays just about the same, and we hold on to equity, our personal cash flow. Anyway, what we take from the business plus our equity in the business hopefully will grow beyond what we held before. So it was not just this sell for a bunch of money. My hope is I haven't been asked to speak at the next ASM event, but I hope to be. And if that's the case, it'll be right after we close on this deal. And I hope to be able to reveal all the details and everything at that point and stage that I'd like to make the presentation about. So.
The question then is, what do we do next? What do we do next? As far as we've sold the business since our time goes to zero, but our cash flow and our. Our net worth stays just about the same, hopefully more. We can then move on to starting other businesses. We can go on to advising more tribe members. We can go on to a myriad of things. What we personally are looking at doing is advising tribe members and that's why we put that survey out on the Facebook page for working with a couple of tribe members to grow their business. And for the somebody who's not Sean or myself, one of the options is you can then make your whole practice building and selling these businesses and having the cash flow and the piece of equity be part of your overall portfolio rather than it just being one business. You can hold onto a percentage of a myriad of businesses that you built and then sold to a buyer or a series of buyers. I hope that helps you understand.
The reason why we decided to sell and kind of what you need to be thinking about because there are.
Most Entrepreneurs get into this business thinking they're going to grow this business. They're going to have $10,000 a month cash flow coming in, and that's what they're going to live on. And there are several ways to get there, and there are exit strategies. Exit strategies. There are several different exits. I've never had to say this before, but never had to say this before, but.
Kathryn, you know I love you, but you're echoing horribly. Sean and I were joking on the way here that somebody should do a YouTube mashup of all the times on Google Hangouts that I have to say, godson, you're killing me. And now we'll add in. Catherine, you're killing me. So this is going to be an official.
Are you dancing, Bahram? Are you listening to. Bahram is listening to dance music right now, and he's fist pumping.
Bahram, you're killing me.
It's the kid hour.
Okay, Kids are killing me. We'll have the dance fist pumping hour soon.
That threw me off. So, since we were talking about buying and selling businesses, I hope that gives you some insight into the different exit strategies that you can be thinking about, because it's not just buy a business and hold onto the business forever. It can be. It can be buying a business, selling a piece of it. It can be buying a business, leasing a business. It can be.
Several different modalities to.
Profiting from this business. It doesn't have to be you operating it. There's several different ways that you can do this. So what I'd like to do before we just do the general update of.
Godson's on the chat box now. He says too much calling with Godson. That's funny.
So any of you who want to ask questions about this process, I know it's for those of you who are in the fourth version of the tribe, I know this is going to be kind of way ahead of where you need to be thinking, but I want you to keep this in mind as you're building your business, that there's several different avenues where you can take this. And the people who bought our business, they're tribe members. They watch these hangouts. So you're going to have, once we complete these deals, you'll have access to those people, and.
They'Ll be looking for more businesses to purchase. So this is something that's going to be available to tribe members, not available to people outside of the tribe, but they're intimately familiar with the tribe and how we do things, and our tribe members They're. They're silent members. They just kind of observe, but they're looking to buy these types of businesses. So those of you who are on this call get to see these potential opportunities. So if you guys have questions, feel free to type them in the chat box or you can unmute yourself and we can wrap about this. We'll take a couple minutes to talk about this, and then we'll just move into some general Q and A.
Hey, Ryan, with the. Without. I'm not asking specifics, and you don't obviously want to disclose specifics, but how was the business valued? Were you looked at as a manufacturer or were you looked at as a distributor? Knowing that distributors oftentimes will have a.
Higher multiple, we were valued as an asset. So I don't know what that means as far as a distributor versus manufacturer, but we were valued as an asset and we were valued as a multiple on the profit, the monthly profit. Now, this is different. This is a great question. This is different than how a lot of traditional businesses get valued. A lot of traditional businesses get valued on revenue and not on profit. Internet businesses are a little bit different. Now, this was the case with me when I was buying and selling websites. I only negotiated on profit, not revenue. And they did the same thing because the Internet is so finicky. Amazon could make a change. Amazon could slap us. There could be a Google algorithm change. A bunch of different things can happen. So they value on profit, not on revenue. And also remember that most revenue buyouts are stock buyouts. So when Facebook buys Instagram for a billion dollars, it was almost 100% stock. Stock, not cash. Ours was cash. So we had a small piece. Our remaining equity can be converted into stock, but right now it's just equity. And so ours was a multiple on the profit that it was bringing in on an average over the trailing year. So they averaged our year and then did a multiple on that. And then we. They gave us a number, we negotiated, they came back, we negotiated. So it wasn't an exact number. It wasn't the exact multiple that they originally threw out. We negotiated terms that we thought were more fair. One thing that they have told us is that if a business only has five months of history or if there's a big spike that will get factored into the overall. The overall average. So if you're like, hey, I released product number two and it outsold product number one, and that was four months ago. My business is four times the size of it. It's not fair to valuate the previous seven months. I only want to evaluate on the previous five, the ones that were $40,000 a month rather than 10. That is something you can negotiate as part of these valuations. But ours started as a hard. Here's the average over the last 12 months. Times this by their number. We went back and forth and negotiated from there.
Pretty clever on their part. Having a menu of small businesses and buying them at a reasonable valuation and then growing the heck out of them. It's pretty smart.
Yeah. Well, if you look at it from all businesses is the operation from your strengths and their strengths are operations and they've got a lot of cash from this other business and they have a large team. Whereas Sean and I are entrepreneurs. We can come up with ideas and get things started very quickly. They can't do that. They've got a whole bunch of legal and red tape to go through. So they have a limited ability to start new brands. We have plenty of ability to start new brands. All of you have the ability to start new brands. Since most of you are new entrepreneurs, you're in a unique position that big corporations aren't in. They can't spin out new businesses all the time. So it's a trade of value. We can spin out new assets very quickly. They can grow and invest in assets very quickly. Do you want to add anything to. I'm Steve rolling the conversation. No, I agree.
I think it's important to realize it's not that they can't. It's if a big corporation is buying yours, you've already proven it to be successful. They don't have to take that risk. So it's not that our buyer can't start a company. They don't want to start 10 companies hoping for one to work. They'd rather look for one that's already working and purchasing.
Yeah, somebody mentioned what was the Mr. Wonderful.
You set it up like Mr. Wonderful.
Oh, like the Shark tank. That's Shark Tank. Do you know you weren't at traffic and conversion with merging just so you can look into the world domination. My long term goal is to kind of have a shark tank like setup in my tribe and freedom fasting to have that type of an approach. And these are kind of. These are the seeds that are being planted. We're bringing in buyers of businesses where Sean and I are looking at investing in some tri member businesses and growing them and systemizing them to sale. So this is the seeds of the long term vision for where we can go as a community is starting to take shape and it is much bigger than the original vision of let's just have a group that works together to go through some training. The seeds of this community are really starting to plant. It's exciting. This is a new process for the three of us selling a business, but it's also an exciting one. It opens up certain opportunities that we previously did not see possible. The idea of selling a business and locking in consistent cash flow for a year, which is our terms, we get a certain payment out for a year plus the commissions from sales and the maintaining equity. That's a little hodgepodge of an arrangement that I never would have thought was possible and opens up certain opportunities for moving forward. What other questions do you guys have about this process or what you need to be thinking about as you're starting or building a business to be. To be in this position if exiting is something that you want to do. Actually, that's a great question from Shannon. Let's take that one. Can you sell a supplement business? Is the question from Shannon. The answer is absolutely yes. But it's a little bit. It has its share of inherent risks. So if your business is built on Dr. Oz supplements, your valuation is going to be much lower because you run the inherent risk of being shut down by the FTC if there's ever change. For example, my arch nemesis, he's been called on previous calls. Mr. Asshat. Mr. Asshat.
Is my competitor in my supplement business. Has another company called Eden Pond. You can look him up on Amazon. You can type in Eden Pond or Asshat. It'll probably show up. He sold Eden Pond so he's no longer.
The owner of Eden Pond. However, if you want to leave Nick. No. He also owns a company called Dr. Danielle. If you want to send him hate mail or report him to Amazon or whatever. I should not be saying this publicly. Edit this from Google. Please edit this part from the hangout when it gets posted to YouTube. No, but he owns a company called Dr. Danielle as well and.
Well, he's a cheating asshat is what he is. But he sold Eden Pond for.
I think a bunch of money. Be at the peak of Eden Pond's growth.
So yeah, you can sell a supplement business. There are just certain risks that get involved when you're selling supplements. I wish I could go back and take all the words that I said out of because he could see this and then come to my house.
And murder me. Which wouldn't be beyond with some of the dirty tricks he has. All that wouldn't spry and you show. Great.
Because we're at My house. We're going to come to your side. Perfect.
Okay, I am off the hook now. So, yes, you can sell a supplement business, but your valuation is going to be lower because of the inherent risks. With that in mind, if you have other assets, if you have other things that bring up the value, a customer list, recurring billing, sales from other channels that are not Amazon, something that is an asset that you control, your valuation can go higher rather than have that can offset the loss that you have from the inherent risks of your business.
Actually, one of my business, we were talking about acquiring my supplement business with these same people that end up buying Zenective. And they wanted to buy it, but there was one product that they thought was inherently risky.
I did not agree with their assessment of the risk, but they did not want to buy it because of that. They actually were interested in buying that line but eliminating that product. I thought that their risks were unfounded. I disagreed and we ultimately decided not to have any talks about that. I ultimately don't want to sell that business anyway because we've got really cool things going on in that business. But that was discussed. They liked the business a lot, but they did not want to take on the risk of one product. It's kind of an interesting thing.
Did our e commerce site factor into the sale? What percentage of sales came from the e commerce site? The percentage of sales was zero because all that site does is redirect to Amazon and so no, it did not factor into the.
So if you do have an e commerce site, absolutely, that factors into your business. We're looking at overall sales. It's not just Amazon. We're looking at the business valuation. So if you have an E commerce site, absolutely, that can play into the valuation of your business.
Ryan, this is Darren.
Hey, Darren, how are you? Good, man.
Am I echoing or does the sound okay?
Sounds perfect.
Okay, great. You know, I just wanted to piggyback what you said about the exit plan. And I think that's important for people who are looking to really build a business. I did two brick and mortar businesses before joining asm and one of them was real estate, which I did well with. And then I got out of that and I went into another business that I had a private investor. And it was then that I was challenged by the investor and he brought up this notion of what's your exit plan? And I was like, my exit plan? I'm not looking for an exit plan. I'm looking to succeed, you know, to make money to, you know, dollar signs. And what it did for me was it really helped me to set goals and understand a path for my business. And I think sometime as entrepreneurs we just think about let's go out and make money. Yes, we want to build a business and I think ASM does well in helping us to develop a brand. But the exit plan for me anyways helped set those metrics, gave me road signs, things that are telling me I'm moving in the direction I want to be. And I just wanted to kind of piggyback what you said so that other people who may be new to building a business just have that thought in mind. Like an exit plan doesn't necessarily mean you're going to fail. An exit plan means that you are headed in a direction where you want to succeed, so to speak.
Thanks for that. It's a more complete way of setting a goal. It's a more well developed goal of where your business is going. Whether for some people their exit plan is to build up a company and operate it to be consistently profitable so that they're not in the business. And for other people their exit plan is to sell it or to sell a piece of it. So yeah, thank you for that. Most new entrepreneurs don't think about that. They're so consumed in how do I quit my job or how do I become financially independent, they don't think about this. And I think that's totally fine. But it helps with the planning process to think where do we want this business to be completed and then hand it off to somebody else if we have pursue other goals.
Yeah, because also you may find that, hey, a year from now, what I was passionate about, I have a new passion. Even though my business is doing well, I have a new passion and I know what my exit plan can be for this current business. And it just keeps the options open for you and well defined.
100%. 100%.
Cool. Anything else coming up on the chat box.
Will they buy me two items? Oh, actually this is a great question. Will a company buy me too items meaning white labeled products that aren't special or aren't custom.
Or does it have to be our original new product? The answer is me too. Products in a lot of cases are just fine. So as long as the revenues are there, as long as the consistency is there, they're happy. So think of it this way. When we meet on these calls, I often give you my set of criteria for going into a business. Small, lightweight, over $20, made in the USA and is a consumable. Right. And I say over and over again, you're probably not going to get all of these, but if you get most of these, you're in a good spot. They take the exact same approach with buying a business. So they want it to be low in risk, consistent sales, consistently, year long, meaning not seasonable, high margins, easy to take over. They have their set of criteria and they're going to weigh certain factors because they're probably not going to get all of these. Their perfect deal would be to be all of these, but that's rarely going to happen. Instead, they're going to be looking at which of these are most important, how do we reevaluate the deal? Because the choice number three is a little bit weak or there's some regulatory issues. So each deal is going to be different. None of them are going to be exactly copied versus the previous one. So they're weighing a certain number of factors and your business is going to be unique in that process.
Have you seen a competitor buyout? Have you seen a competitor from Thomas Miller? Have you seen a competitor buy out a company to avoid competition? I've seen it in not.
But I have seen it in the website buying and run when I was really into that. So, yeah, I used to do that and I've seen lots of people do that, but I haven't seen it on Amazon.
Cool. So what I'd like to do now, that's the structured training for today. What I'd like to do now is hear where you're at in the training, what sticking points you're having and. Oh, actually, good question from Godson just came in. Can a seller. Can a resident outside the U.S. oh, well, yeah, sorry, Godson, your question was a little. It threw me off because it was a little bit off the topic, but it's an easy.
Seller outside the US Sells supplements. Yes. As long as your supplements are sourced from the US and your company is based in the us as long as you do that, you're fine.
All right, so where are you at in the training? How can I help? And what roadblocks are preventing you from getting to the next level?
Hey, Ryan.
I've got a number of questions, but I'll start with one and not be too selfish here. The first thing is I wonder if it's a good idea to have a 100% guarantee for a consumable. It's not an ingestible, but it's a beauty product, so to speak. So is that 100% guarantee still a good thing? And also, how do you deal with that, like outside of Amazon? So let's say someone hates it and they return it but they want like I don't know, I don't really know what Amazon does other than you can like set a fulfill order to send them a new copy, right. And then Amazon can refund them or whatever. But is there anything outside of that? And also is it a good idea for a consumable?
Great question. And I say 100% guarantee is a good idea in every business, whether it's consumable or non consumable or whatever it is. Expensive, cheap, 100% guarantee increases conversions beyond your added cost. So yes, some people will take advantage of your 100% money back guarantee, but the bump in conversions you get from having that far outweighs what you will get as far as flack from customers. Flak isn't the right word, but far outweighs that. Yes, you should have 100% guarantee on a consumable product. What you can do outside of that.
This wasn't so much.
There was a situation with one of my products in one of my other businesses that wasn't yoga related where somebody was dissatisfied with their product. So we refunded them and sent them other versions of their consumable.
We sent three different products. Just as I'm sorry that this didn't work out for you. Turned an unhappy customer into a very, very happy customer. That wasn't a money back guarantee thing. That was just us providing over and above awesome customer service to turn a nasty customer into a happy customer. So that wasn't unique to having a consumable. It was just something we decided to do. But with a consumable, yes. If somebody's like I need more time to see how I'm returning. I want to return this because I need more time to see if it works. You have the option where you could send them a new one to extend their time and prevent a refunder from hitting your Amazon score or from hitting your numbers. So the cool thing about consumables is yes, you can send them additional stuff that will often satisfy a complaint, but that doesn't really factor into the money back guarantee part. It just helps mitigate some unhappy customers.
Kurt there.
Yep. Is that something that's all done through Amazon like the money back guarantee, or is that something that's sort of outside that company itself has to deal with.
That customer?
If your sales come from Amazon, the refund process through Amazon is very simple. They just pack it up, send it back to Amazon. Amazon refunds them. You don't have to do anything. If they contact you directly. All you have to do is link directly to the Amazon description of how to refund the product. Now, if it's a sale that came off of Amazon, it's coming through an E commerce store. That's obviously a different process. But if it's on Amazon, they have to go through Amazon's channel in order to get that refund. But you can also. I think you can yourself, right?
Yeah.
To add on to that. So Amazon has their own return period, depending on which product field you're in. So it's different for things like DVDs, as it is to a yoga mat if the customer wants to return. I think for yoga mats is 30 days. So if it's 45 days and they want to return, Amazon won't process it, but you can refund it manually or send them a replacement if it's something they want a replacement for through, like you said, the fulfillment order or there's an option in seller Central for refunds. So Amazon doesn't take into account your lifetime guarantee. They won't process returns forever automatically. But you can always process the return yourself, if that makes sense.
So to answer your question, Kirk, it's both.
It can be either or it can be you or it can be Amazon.
Okay.
But it can all be done through Amazon, by the sounds of it. So that is exactly what I'm looking for. Thank you.
Cool.
So where you should be now is you should have your listing up. You should have inventory either on its way or testing prototypes. You should have several different headlines written. This week, my men's company got hit with.
Title violations. So we had to go to that very vanilla title which we were expecting. We're prepared for. Everybody's going to get hit with that eventually.
You should obviously know your product and have your business. So we're getting close. Your next things that you need to be thinking about are your sales. And we've already had the assignment of thinking about what are you going to be doing in order to get sales kicking off. So you should be. Your energy right now should be being focused on your listing. And it should be being focused on an email list or a Facebook page or just booking a time for a Zon blast or a viral launch or whatever service it is that you're using. So where else are you guys in the business? And Brian, is it okay if I put you on the spot?
Sure. Cool. I would like to hear about your business and your plans for the next level. I'd like to kind of hear what you have planned as far as where you're taking your business. Your business is six months old now as far as taking sales goes. So what's your plan for the next level? Sure.
I'm ASM3 started in May. I came to ASM a little bit different than a lot of people. I already had a product, had four products. I launched with four products and as Ryan said, I've been selling on Amazon for about six months. The business is now very solidly a six figure annual business.
Well into phase two.
It's in the beauty category, which people probably know just by clicking through on me.
I've spent 15 years developing businesses in Europe and a good friend of mine is a setting up a company to be an importer for me in the Netherlands and selling to shops. So we signed a distribution agreement two months ago and that will be kicking off next year.
I've been approached by some other folks for bricks and mortar.
Distribution of the products. So.
The Amazon business continues to grow. Having the bi weekly payouts is a nice thing from cash flow.
But the next plans are to continue the product line expansion. I've got a whole list of products.
In a variety of spaces within the beauty category, all related together.
And.
I'll be rolling those out likely next year.
It's been a great journey. It's been a wonderful journey.
I just want to reinforce the point that has been made many, many other times and that is you're not creating a product, you're creating a business that has multiple products and multiple channels.
It's going well.
I would like to add in one thing for you to be thinking about in 2015, and that is for your business specifically, since your target market is so well defined and so somebody who buys your products is probably going to buy several different products. One thing you should I'd recommend you think about in 2015 is starting to collect your customer data so that you have some way to follow up with them and tell them about other products. I don't know if you're thinking about that now, but I would recommend you be thinking about that going into 2015.
I took your postcard idea and ran with it.
Good, good.
Enough said.
Glad to hear that.
Yes, absolutely. And those of you that are in ASM4 and just getting started, you'll see this soon enough. You don't really get your customer data through the Amazon sales order process. You don't know who your customers are. You can't contact them via email. You need another way of getting them on your email list and that's what the insert card is all about that, people talk about VIP clubs, other things like that.
While we're on this topic, I'll mention that my partner Matt and I are are likely going to be testing some things with our calling strategy in order to get more customer data. So rather than give somebody a bonus within their packaging, we say, hey, we would like to send you a bonus. Go to this page and fill out your information to get your bonus. We're going to be testing different ways of getting that customer data. We might also do it through. There's several different things that we can test and I don't have any data for you, so I don't feel comfortable reporting yet. But it's all kind of still in the idea phase. But we're going to be testing that stuff and we might have some data by video. The next slide.
So, Ryan and Sean, if you don't mind sharing on Zen Active, what sort of email capture rates have you experienced? Which were the best ways to capture email?
All of our call up.
Was done on Facebook, so all of our contacting of customers was done on Facebook rather than on.
Email. Couple of reasons why. First reason, we market ourselves as an environmentally friendly company. So one of the ways that we do that is by eliminating unnecessary packaging in order to stay consistent with that.
What do you call it, brand vision. We don't have any packaging in order to have inserts in our products. The second was we used, but I feel like I have to give a disclaimer. This was not a perfect way of doing it. It's just the way that we decided to do it. It worked well for us. We went the Facebook route of building up our launch list and I presented about this from stage. And it wasn't because it was a magical way of doing a launch. It was just the way we decided to do it because we had no audience in this space. But since we already had a Facebook page, we decided to keep all our efforts there. We had a responsive audience, so there was no need for us to try and pull them from one vehicle to go to another vehicle. The only way that we added onto that was we would sometimes send them to blog posts or YouTube videos that were on our blog. And we had an email capture form there. But all our efforts to really communicate with our customers were done on the Facebook page.
To add on to that. So the Facebook page is what we have been using to build the email list. Got really good results running coupons and the launch list.
Right. Launch.
But we do have customer service representatives calling and getting personal emails which they then Record in Stitch Labs. So we have a customer management software that has all of the addresses, all the phone numbers, all the Amazon emails, and then anyone that answers the phone will ask them for their personal email or send them a coupon or a gift card and that all gets stored in Pitch Labs, which you can then export. We haven't really done anything with that yet, but we do have been capturing all of that data since we started.
Cool.
I'd like to ask a question for the tribe. I posed a mini assignment which was if anyone would like to test getting video reviews on their product listing. If anyone actually did this, I would love to hear about it. Please put it in the chat box or wave at me if you're on the call. We sent an email to our list to collect them, but we have not collected them yet. So I'll have data to report probably in a couple of weeks on this experiment. But if any of you actually did that, please wave at me or put on. I'll put it in the chat box. I have another. I'll say this rather, I have another little thing I'd like to put out to the tribe. Ah, hell, I'll just. They'll give it to you now. Another thing I'd like for you to test is.
There are different from what I understand and what I've been told from my friends At Beachbody, the P90X company, there are different levels of Amazon accounts and some of the Amazon accounts are able to do direct mail, meaning you can send email direct mail pieces, postcards to your customers. If any of you are doing that, this is something we have not had the cojones to do because we don't want to draw attention. If any of you have done that and have stats, I'd love to hear from you privately before we share the details publicly because it's a little bit of a gray area on Amazon. Amazon has sometimes they say yes, it's okay to do it, sometimes they say no. So if any of you have done this, please contact me personally and we can see if it's worth springing out.
On a hangout sometime.
Ryan? Yes, sir.
This is Bahram.
Hey, Bahram. Hey.
Hello. From Geneva, Switzerland. And we are. I am an ASM3 and I took the business very seriously. That's why I'm moving to Dubai.
We have started our company there. We set up our company because of tax reasons, as you all know. Probably Dubai has zero tax on income and fortune and I'm moving from with all my family. That's why you Saw my kids jumping left and right. I guess they're happy to move to Dubai.
We're moving on Wednesday to Dubai and we have set up everything to start the business, the E commerce business from China to Amazon. We have sourced our product, everything is ready, we have our website, everything's cool. We're just about to package and send it to Amazon. I just want to share with you guys that we just sold.
We'Ve been already marketing to Dubai people already to companies like B2B business and we have already sold before even reaching Amazon 10,000 units of our products as white labeling to companies that are preparing their gift items or branding items to their clients. And this is a venue that we haven't, we didn't even think about it. We just thought we're going to go for retailing and so on and so forth. And we kind of bumped into this opportunity also that we're selling it as wholesale, if you like, say to the companies that ordering from US 500 units at least for their customers or for their employees for our product. Our product is related to smartphones and basically as you know, about 2 billion people around the world carrying a smartphone with each other and the mobile section is about 4 billion people. So more and more people, 1 out of 3 or 1 out of 4 is carrying this smartphone with it. So anything related to smartphone I guess is a home run and we're into that business right now. So that's what I wanted to share with you guys for white labeling also for companies etc. That works fine with us. The only question I have for you as of with regards to business valuation, definitely I would like to hear more from you about the business valuation because we're in this business to sell the business in three years time. We have a horizon for an exit strategy for three years. What makes our business really valuable, for example, as a non Amazon, if Amazon comes and buys us out, by all means, no problem. Probably we're going to be the next diapers.com that they bought like for $500 million at that time in 2010, two guys started the business 2005 and selling other people's product and they bought it out for 500 million. But probably we're not to go there. Probably yes, probably not, but however, I would like to know about the business valuation. What do we really need to concentrate right now in order to exit it in a nice manner? Let's say in three years time. I understood from your side that you keep equity in the business 25% getting a cash flow and Moving with the equity. That's a good idea that I have. We didn't think about it. We were thinking about really exit strategy 100%. I would like to know from you now that we're starting the business really at the very early stage, what do I need really to concentrate or who is my buyer if you like. So that is interested in my business and E commerce business, buying it from China and selling it through Amazon. What do I need to be concentrated and what's the valuation going to look like in 3 years time? Thank you.
All right, cool. So first of all, you win the ballsy tribe member of the week award first of all for actually you get it. I'm going to give it to you next week too. Moving your family. Aunts are already selling. Even though you're not on Amazon, your prize is you get the leftovers of Sean's coffee, which is some grounds I can't show you without spilling it. Ground and some thick liquid. That's your prize. Right.
Be careful, be careful. That's going to give you it to a fortune teller to pour it in like a Turkish coffee. They're going to show what my fortune is going to be.
Turkish coffee is delicious.
First of all, there's a couple of things we need to answer. First of all, what makes your company valuable? It's controllable assets. Since you're not on Amazon, what makes your company valuable is what are the controllable assets? The things that are in your control that are bringing in revenue or grow the business. So this is things like your buyer list, people who are buying your products. If you have exclusive relationships with them, meaning they can only buy from you or you have some sort of recurring relationship with them, that becomes a controllable asset. If you have some sort of distribution channel that is unique to to you, it could be a customer list, it could be an E commerce store. That is a controllable asset. So it is things that add value to your company or bring in sales that you directly control. So the things that you're doing are actually more valuable than taking sales on Amazon because what you're doing is building up a more controllable asset than selling on Amazon. Amazon is one buyer. Your existing buyers are buying 500 to 1,000 units at a time. They are your own buyers. So they are controllable. So that's the first thing that you need to be thinking about as far as what makes the company valuable from a future valuation standpoint. The things you need to be thinking about are how do we make these Sales consistent. And how do we develop systems and processes that operate beyond myself, Meaning we're automating the process as much as possible. This is one of the main things that companies look at when they're evaluating a company. Because.
If they're buying your workload, it devalues your company. But if they're buying your asset that is already automated, that inflates its value.
It would be less valuable if they had to come in and automate all your processes. But if your processes were already automated, first of all, you're going to make more money when you own the company. And second of all, you're going to work less and think about growth of the company. And third, your company is going to be worth more than if you had not thought about automating the process. Best book I've read on automated systems is a book called Work the System. It's a really easy read. I read it on the beach in Mexico. It's by Sam Carpenter. It's about automating your business to the point of having systems and processes. So you are far ahead of the curve, my friend. I would like to reserve some time with you on a future call to talk about how you were able to sell to those wholesale buyers. If you're comfortable with sharing that on a future call.
Sure, absolutely. Because my idea is like, for Amazon also, we considered in Dubai, there is huge shopping malls already. So whenever I go to these malls, the biggest shopping mall in the world is Dubai Mall, of course. And whenever I go into this Dubai mall, it gets me inspired because I see Amazon exactly like a shopping mall with all these stores coming in. And the client walks in and goes to the info desk and says, hey, where can I buy these shoes and where can I buy this? And they say, third, go left, go right, go second floor, and you're going to get there. So if I'm going to, if you like, bribe that guy, the info guy, and put an ad there that he sees me, that goes left and right, that's going to be Amazon. But hey, I feel that Amazon is going to be more interested in people bringing those people to the shopping mall rather than the people already in the shopping mall looking already left and right. They know, ready to buy mall and looking left and right. So me basically, personally, I'm bringing these people to the Dubai mall, the shopping mall or the Amazon, right? And they say, oh, okay, now I'm in the store. This is your store, okay, I'm going to buy it from your store. So I brought these people to Amazon or to this Dubai mall. And basically I'm going to become more valuable basically of bringing the people to the shopping mall rather than extracting those people hanging out in the shopping mall. I feel that this is my gut's feeling that I'm going to be more valuable on those people that I brought to the shopping mall rather than having extracted those people got use of these people that were already hanging out on the shopping mall, you see. So yeah, by all means I'm ready. But my question also to you, another question I have. How valuable why Amazon would be interested in a business like ours, like a third party buyer? Completely understand, I imagine that somebody wants to get into a business like this, but I was told that Amazon themselves, they come and offer you to get your brand and to provide you also some kind of a cash for your business. Why Amazon would be interested because they're going to be ultimately having all the data and all the customers and they give their credit cards and everything to Amazon and not to us, for example, so they have already the data. Why would Amazon be interested in your business to buy you out?
That's another question. Well, the answer to your question is they probably won't be. Amazon probably won't be the buyer of your business or any of our business. The reason why they buy a Diapers.com is because Diapers.com has controllable assets that contribute to Amazon's overall goal.
They go into a people as far as actually people do buy diapers on Amazon and it's actually.
A very large recurring revenue play for Amazon to then take an additional channel that people that Amazon currently doesn't have access to and be able to tap into those new users and that new model. So that's a deployable asset that they have access to that they didn't have within their store. We probably won't build deplorable assets that Amazon will. If you do that, you're in the minority. You're not the ruler.
The people who do buy companies are people who are looking for some sort of controllable asset that adds into their existing controllable assets.
Right.
By the way, remind me to tell you sometime about my story in Shoot. What was the town called? It was a two name town in Switzerland. It was like Hans something, this little podunk town about 20 minutes outside of Zurich.
And it was one of the scariest and weirdest. I had some very weird moments in that town.
Like a ghost town or what was it.
So I flew into, I booked a place in Zurich because I knew that in Zurich Most people spoke English. Little did I know that this place was not in Zurich. It was about 20, about 15 miles outside of Zurich. And no one spoke English.
Nobody spoke English. Not a lick of English. At 4pm on a Sunday when I'm trying to get something to eat and I accidentally order horse meat. Things then took a turn for the worse. So it was just a very. I'll never forget it. It was one of the oddest and coolest experiences of my life in this little town outside of Zurich. And I thought it was Zurich. Little did I know a little American tourist.
English is trying to get around in.
What a weird but cool experience.
Horse meat. How was horse meat?
All right, tribe members, that was an eventful call. We talked about. We talked about a lot. My brain's a little bit fried. Let's. Let's take a couple. Are there any interesting chat box questions we should hit before we call it a day?
What is this last one? I'm reading this last one.
Oh, somebody's just saying that a cool way to interact with your customers and get them to leave feedback is a service called Grabimo G R A B I M O. I don't know about that.
Somebody saying, I have a question that comes in a bag. Should I add an insert to that product or will I get in trouble when Amazon employees since there's something to hide? It. Very interesting question.
You probably won't have any problems as long as you don't violate terms of service. You might have to be a little bit overt in the way that you are connecting with your customers. But if you say.
Added with your order, you get a free ebook, go to email us at this or go to this website to claim your ebook. Probably won't have any trouble. But you can all like it is okay to email Amazon and ask them if you can do something. If you add an insert to your packaging, sending them to their bonus.
It'S okay to ask them if it's yes or no. If they say no, then you know better than me the answer to this question.
Okay.
Yes. Who's saying something?
Darren.
Hey, Darren, go ahead.
Yeah, Just real quick. This might be a good future tribe conversation call because it's been touched upon a couple times by Brian and La Rom, which is how are we networking outside of the Internet to provide more sales for us on Amazon? Because I think that's. That's a crucial or important aspect that you don't necessarily hear in the ASM training. But we're sending our product this week to Amazon. We already have 50 people waiting that we sent a test market to who were waiting for us to say our products now launched on Amazon and they're going to write reviews. So.
Business cards, whatever. Maybe that's a good future call that we can have.
Yeah.
It'S something that we do pretty heavily in our supplement business, is aggressively market to other channels. That's why two weeks ago I drew out that content marketing strategy. You can switch out the Amazon sales pages, your own sales page. But yeah, this is something that will hit more in our live events when we're in person. Which brings me to one house cleaning item I post in the tribe. We're doing the first ever Freedom Experience which is going to be a three day workshop here in Austin, Texas. We're working on dates right now. It's either going to be the end of February or the beginning of March. And for those of you, I've got a couple questions about it. One of it is, can I bring a partner? The answer is for this one, you can bring a partner. It's $1,000 to bring your partner. I have added costs into this. We're going to be spoiling you with some cool things. So.
If you pay their cost, which is about $1,000 ahead, you can bring a partner. And some of you have shown interest in putting a deposit down for a spot. There's 10 spots available. You can do that by putting a thousand dollar deposit down with the remainder due at the end of the January. So if that's something that you would like to do, you can message me on Facebook or shoot me an email or leave a comment on the thread in the Facebook page and I'll have more details for you as we lock down dates and venues and stuff like that. So great call today guys. And we will be meeting in person almost exactly two months from now and I will see you guys on next week's call. Thanks everybody.
