Turning A Physical Product Business Into A 100 Million Dollar Empire with Brian Creager

You're listening to Freedom Fast lane presented by capitalism.com this is the show about building businesses and investing the profits so that you can live life on your terms. And now your host, the future owner of the Cleveland Indians, Ryan Daniel Moran.

Hey everybody. Welcome to Freedom Fast lane presented by capitalism.com my name is Ryan Daniel Moran. Here on the show we talk about building businesses and investing the profits. And today we're going to be joined again by my friend Brian Krieger. The reason we're bringing Brian back onto the show is because he has had a huge up leveling in his business and we're going to talk a little bit about that. One of the cool things that happens as an entrepreneur is your sites and your goals move as you become more successful. So for example, when I started selling physical products specifically on Amazon, I just wanted to have a million dollar business. And when I had a million dollar business it was like holy crap, now it's possible. Now this is the new nor know how to build million dollar businesses. I can duplicate this and I have duplicated it. Now I have multiple million dollar businesses. So then I want to have a $10 million business and I've hit that point and now it's Holy crap, now $100 million business is actually possible. And you realize that the only thing that's been standing between you and more success than you ever dreamed of has been your mental mindset. A very similar thing happened to Brian. He left the corporate world 18 months ago when he had barely a million dollar business. Now he has his sights set on 100 million and we're going to decompress what it looks like for him to be plotting out that plan. So just to be clear, he doesn't run a hundred million dollar business now he runs a multimillion dollar business. Not a hundred million dollar business. But we're going to deconstruct how someone who comes from a really big company is now looking at $100 million empire and how he plans to reverse engineer that and build something amazing. So if you're at that point where you're starting to grow as an entrepreneur and, and you're saying how do I go to the next level? You're really going to benefit from this chat with Brian Krieger.

Hey everybody, welcome to Freedom Fast Lane. Brian Krieger, welcome back to the show. It's good to have you back.

Thanks Ryan. Thanks Ryan. Great to be here.

Yeah, I mean I really wanted to have you back because.

When you were.

Last on the show you had just left the Corporate world. And we talked about some of the lessons that you brought with you from the corporate world now that you were a full time entrepreneur. But things have gotten a lot bigger for you since then. Not only in terms of what you're selling and how you're approaching business, but back then you had your men's hair care products and you were helping new entrepreneurs. And then some things happened and things are a lot bigger and I think the light bulb has really gone on. So would you just give us a high level update on what's changed and then we'll dive into some specifics?

Yeah, absolutely. So I'm kind of a year and a half post the corporate world. It took me 27 months to hit my first million dollar run rate in the business. It took me four months to hit the two million dollar run rate and I'm pushing three million now.

Congratulations.

Thanks. The takeaway from that is focus on your business, focus on what matters. And I spent a lot of time, even after I left corporate, bouncing around different ideas, doing different things and.

Didn'T realize how burned out I really was. And it took me well over a year to really work my way through that. So you know, obviously for your listeners, there's people in the corporate world, there's individuals doing other things, things in other businesses, but take the time to recharge yourself and focus on your business and you'll be surprised at the growth that you can achieve from that.

What was the difference between going from 0 to 1 and going from 1 to 3? Why did that happen so much faster?

Simply more brands and more products. The more products that you bolt onto your business, the more brands that you do that under, the wider you spread yourself.

The more secure the business is and the larger the business grows. You've said this numerous times that products and brands feed off of each other both in the cross selling opportunities, but also in the A9 algorithm. And it gives you more to take off Amazon as well, right?

Yes. I mean we have.

We'Ve been surprised at some products that we launched. I remember specifically when one of my partners, Matt, said I'm pretty sure this product is going to be a dud and it turns out to be a million dollar product. And just that one product adds seven figures and sometimes you're surprised with, with what takes off. So for you it took that 27 months to get to the million. And so it was just doubling down on launching new products and starting new businesses. Kind of in the same area of selling physical products to take you from 1 to 3 is that correct?

Yep. Doing more of the same. But one thing I did which seemed to work for me, it may or may not work for other folks, is to batch things together. You get economies of scale. When you're going to Asia and you have 80 products to source, or 80 products to pick from to source and walking away with 15 or 20 or 30 or something like that. And then you actually commercialize all of those together, you get economies of scale in copywriting and photo shoots and a bunch of other things that go into commercializing and launching a product.

That's really interesting. So you actually are just batching the production process together so that you have lower prices.

Well, the products themselves will come from perhaps different categories. Some of the products will come from the same supplier. We'll find one product, open a relationship with a new supplier, and then immediately look for additional products that that supplier is making. We can then add to and augment the product. But we don't lose sight of, okay, just because the supplier's making it doesn't necessarily mean we can sell it or that there's a market for it. So we continue to do our due diligence. But the key in batching is if it takes you four weeks to do everything it takes to launch a product, to do all the packaging and the artwork and the copywriting and the listing creation and the keyword analysis, everything else it takes to do all of that, it takes you four weeks to do one. It might take you six weeks to do six. You get huge economies of scale when you're batching things together. The flip side to that, of course, is something we were talking about a little while ago. And that is the financial implication of that. When you go drop a quarter million dollars on 15 or 20 or 25 products. And that's kind of a swallow hard moment when you're sending out wire transfers in that amount.

Yeah, I imagine so. Well, Brian, I know that when we spoke last you had your product line, but I know things got a lot bigger for you when other people who came from different businesses started validating what you were doing. And I've experienced this myself. When we talk about the numbers in selling physical products, people tend to raise their eyebrows or even look at the countless people who have built million dollar businesses within the tribe and coming to our training, it tends to raise an eyebrow. And you had a similar experience with that where someone looked at the outside and thought how much bigger could this. Could you share as much as you can about that experience in that moment?

Absolutely. And that goes right back to my start in this business and actually even our first conversation, which is some three years ago now, and I said, what? You can sell that on Amazon? My reaction is exactly the same.

For individuals that are not in the know about the potential of the market's marketplace.

Yeah, they are taken aback by the volume and the scale. But if you just pause for a moment and think about it, think about the size of the marketplace, think about the breadth of the product offering, it only follows that there's going to be tremendous businesses grown as a result of that marketplace. I think the number is something like 50% of the sales of third party sellers or something like that on Amazon.com.

And you know, in the hair care product space, it's in the beauty space, it is highly competitive, but it also a large market. There are a lot of bottles of shampoo sold every day and every minute on Amazon.com so what was that like.

When somebody else validated it or what was his reaction when you kind of shared with him the numbers or how fast that business was growing and did that shift anything in your perspective?

So the interesting conversations that I've had with others as I've kind of explained the basics of the business model, which are not that complicated, is like you said, the scale of the potential and also the portability of the activities that it takes to be successful across a broad range of product categories. If you really truly learn the mechanics of how to identify, commercialize, launch and grow a product in one space, you can replicate that process across other spaces. And one of the cool things I'm working on right now is actually systematizing the product research and market research side of this so that we've got a similar templated process which is scalable irrespective of the type of product. Now the cool thing with that is we can take this huge market and apply the same methodology across almost any product. And I've started saying and using the term that I would like to be the Procter and Gamble of the online physical product world. Where in the sense that Procter and Gamble is a collection of different brands, some large, some not so large.

But what they do is they understand how to identify, commercialize, launch and grow products in their space.

Which is typically retail, which is where, what is it, 90% of the consumer economy remains through retail.

Right. And to you, what does that look like becoming the Procter and Gamble of the online space? What will that take? How big do you want to take it and what's your plan to get there?

My sense is it would Be at least a 50, if not $100 million revenue company. It's going to take people, it's going to take products, it's going to take dedication, it's going to take a lot of luck.

And some decent product selection as well.

There's a lot of different things that will go into this and quite frankly, any business.

That any of your listeners are looking to build. But also I would encourage folks to not lose sight of the strategic objective. Number one, the strategic objective, what they're trying to do for me, it's to build a multi brand, multi product company. It's going to be a different strategic objective for somebody else. The second thing to not lose sight of is why you're doing this. And that has been a very strong realization for myself over the past 12 months. And that's really for my family and my kids. And I know you've got a young daughter as well. The energy and power I get from my sons is just amazing. And I think through the corporate career and all the trips that I took now I can take my sons with me when I want to and just did that last weekend.

That's fantastic. So that's a bold. Well, some would say it is a bold aim of becoming a procter and gamble of the online space and that it will take people and it will take good product selection. Obviously you're doing at least part of it right to have gone from 0 to 1 and then 1 to 3. It's a different process to go, of course, from 3 to 100 million. So tell me a little bit about your process of thinking.

There's.

Sure the mechanics where the rubber meets the road are going to be very similar. The structure behind that is going to be different. It's going to take people, the right people, the right management. It's going to take financial capital. You look at your inventory and how much cash is tied up in inventory and it's going to take investment of time. And probably the two most important things in that are the people. If you can't find the right people to grow your business with you for you right beside you, choose whatever you want. But you got to find the right people to grow. And I just hired another fellow a couple weeks ago and he starts at the end of March and just excited about growing to get growing the team. And as the company grows, my efforts move further away from the actual mechanics of directing a photo shoot, for example, or writing copy, and more towards making sure we've got the right people doing that on the right products at the Right time.

And do you imagine this over multiple brands? Do you think you'll have a few brands that just scale up? There are individual brands that are 50 and 100 million dollar company. So what do you expect it to look like?

For me, I'm not averse to a single brand growing that large. I think I'm willing to try.

Well, Brian, I don't think anybody would be adverse to having a 100 billion dollar brand.

But go on.

I think my chances of achieving that are greater. The more brands that I have and the more systems and processes I have behind those brands to grow them, you get more eggs in the basket if you will. You increase your chances of one of them growing very, very large. I'm still in the very, very early stages and I'm adding products. And when they make sense to add those products into the brands I have, I'm doing that. When it makes sense to add new brands, I'm doing that.

As you probably have experienced when individuals in your network find out that you're in the physical product space, everybody has a product idea and comes to you with what do you think about this and can I make this or sell this, etc. So some of those make sense, some of them don't. And they may or may not make sense to bolt into a current brand. And where they do that's great. Where they don't create a new brand and grow from there. That's one of the beauties about the shrinking of the supply chain between the manufacturer and the consumer. The manufacturer. And in the case of private label companies like ourselves, we're the manufacturer, we're shrinking that. And you get closer to the customer, you find out more about what they want. And you don't have to be a big multinational company with all of this engineering behind you to create a brand. You can do it from your basement or your home office or wherever you want to go.

I know I have had a lot of fit in the last couple years in terms of debt or raising money. And I realized that there can be immense benefits to taking on capital partners or to even raising debt capital. I know you had at least similar shift because you've realized it can make you grow faster. Could you talk a little bit about that? And you mentioned to me that you at least qualify for a lot of outside lending. If you went that route, how would you deploy that capital? And where do you see that playing as part of your business?

So one of the interesting things with the batch launch process that I described is it also batches the Cash demand needed to grow your business and you can bundle that cash into a single, whether it be a three year term loan. Ideally, it would be great to have a business line of credit at Libor from a bank. That's typically not something that most small business owners have the opportunity. I'm almost there. Not quite Libor, probably Libor plus a point or two. But you know, as a physical products business, you're always going to have inventory, you're always going to have cash tied up in inventory. And the way you release that cash to continue growth is through taking on debt. And I'm speaking specifically about debt, not by taking on equity, because I think equity is a good thing early on, especially if your business is small like mine was. I brought on an equity partner almost a year ago now. Nice cash infusion. It's funded the staffing growth, it's funded the first couple batches of products and now I'm in a position where I can go out to other lending sources, one of which of course is Amazon lending. Batch that together, you know, take a one year term loan from Amazon and grow, go identify and launch products. So by batching this stuff together, you can go to a lender with a package and with a bunch of ideas and your lender is more insulated from a single product failure. If you're batching together because you're going to have product failures. But if you batch 20 of them together and five of them fail, the whole portfolio is still going to be attractive.

Yeah, absolutely.

Yeah.

I like how you think about it as a portfolio because most people think about it as a product or product line, which I think is. So it's such short term thinking. Yeah. And it requires something to quote work instead of building something that can be bigger than what you expect and really make a splash in the marketplace. Brian, you're bringing up Amazon a lot. If you're going to go proctor and gamble, I imagine you're thinking bigger than Amazon as well. So where does that factor into your strategy?

That is one of my core strategies for 2017, to take the successes from a revenue standpoint that I've had on Amazon and replicate that with the products that have been successful off of Amazon and perhaps even look at product line extensions, which may not be profitable on Amazon, but in the classic cross sell, upsell build, the email list.

Could be incrementally profitable to the overall picture. And that's a key strategy for this year.

And what does that involve? What does that entail? Is it retail, Facebook video? What are you kicking around there.

Retail is a whole other animal. As you know, my focus for this year is online, but off Amazon and likely on my own initiative versus other online retailers. I may have a couple products here or there that would fit with some of the other online stores. But my focus is going to be on building my list in quotation marks, building my direct customer interaction, because that's going to have a significant multiplier on the business growth potential going forward, as you well know.

Yeah, I do, absolutely. So you brought up people as an important part of this overall strategy. How are you sourcing talent or how are you planning to grow people to be able to create brands? Because you're not going to get $100 million business if Brian Krieger is the centerpiece of it all. So you and I have talked privately about this, about how. So how are you sourcing and keeping really good talent to be able to do that bigger than you could do on your own?

There's a hiring process that you are very, very familiar with because I know you and Jamie Masters discussed it on stage at the first F2L2 and it comes, I learned it first from Danny Enie. And you know, it's a four step hiring process from application to, to assignment, to assessment, to interview. And it's actually applying a funnel type of methodology to hiring where the application gauges interest, the assignment gauges ability, the assessment gauges fit. And by the time you get to the interview stage, you've got somebody that you know is interested in the job, can do the job and is a fit with your company. And as long as you have some definition as to what that individual is going to do, the reality is, in our businesses, almost anybody with good acumen for the job, irregardless of their background and history and education or whether they have a degree or don't have a degree, it doesn't matter as long as you can pass them through a process just like I described. A process for identifying, commercializing, launching and growing. A process. I've got a process from Danny that you know about for identifying, vetting and hiring people. And for me, it's more important to find somebody who's got that internal drive, that curiosity that wants to grow. Because as a fast growing entrepreneurial company, what you are working on today may or may not be what's important to be working on a month from now, or a quarter from now, or a year from now. You need individuals who are motivated to grow with you and that can complement you. Because in a small company, when you have one employee or two or three employees, they're almost partners. And if you're all doing the same thing, one of you is redundant. And you've used that many times in the past. As you grow and you do more and more of the same things, yes, you need individuals which have overlap. You need backup to folks as your number of listings grow from 1 to 50 to 100 to several hundred. And obviously there are sellers with several thousand listings. Just the bandwidth and power in managing that Amazon channel and all of the things that goes along with that just increases, that workload increases. So as you grow, you need to have duplication. But early on, it's important to have individuals who are flexible and can overlap and cover and work with each other.

Brian I don't know how big the corporate firm was where you worked, but you're used to dealing with bigger numbers and bigger capacity in more of a corporate setting. It's one of the things that makes you think big as an entrepreneur. So how has coming from the corporate world given you a different perspective or a different mindset or what lessons have you brought over from the corporate world? And I ask because I've been an entrepreneur since I was 18. I've never worked a real job. My mindset, I have to stretch who I hang out with and the books I read. And I imagine that you're just used to seeing how the corporate world is done. It doesn't mean that you don't struggle, but you might naturally have a higher sight than people who are just going out and being entrepreneurs for the first time. Do you think that's the case, and if so, how?

I think there's an overarching theme that an individual should be cognizant of the good things from a corporate world and the good things from entrepreneurship. They should also be aware of the things which are perhaps not so good. The message there is to pick and choose. And it's going to be different for different people in different businesses, but to pick and choose those attributes which make sense for you and your business. So as a specific example, something I've taken out of the corporate world, my undergrad's electrical engineering. Okay, I'm very regimented and organized and systematized. And I take away out of the corporate world the need to be organized, to have. Not that every corporate employer is organized, far from it. But in my view, the more organized and structured a company can be, oftentimes the bigger they can grow in scale. Flip that around. An entrepreneur usually has a higher level of flexibility in zig and zag if you will, as they're going down the path of their business. Meshing those two thought processes together is some of the magic in entrepreneurship, I think. So to have enough discipline to say no sometimes to that bright shiny object, but to have enough vision to see the bright shiny object and meshing those together, and they're all judgment calls. There's no right or wrong answer. They're judgment calls.

So I want to kind of decompress and see if I understand your overall strategy. And it sounds to me like you're coming from the corporate world. You're used to dealing with infrastructure and you're used to dealing with big businesses. And because you have had the first success with that first brand and then the second brand, and now you've got a $3 million run rate, and you've been verified basically by outside people who say.

I'm willing to throw money at this, or if you ever decided to raise money, I would be in. You see that the numbers makes sense and you know how to get economies of scale to be there to where you could build an empire of brands that allow you to be the Procter and Gambler or the Unilever of the Internet. So that's my perception of what it is like, the overall strategy in a nutshell. Am I at least in the ballpark of how you view what you're building?

You're right exactly in the Cleveland Indians ballpark.

Sounds like a great way to get to Cleveland idioms.

We have very similar mindsets on this and very similar strategies for how we're going to get there. And I do believe that people piece is so important to be able to do that. So for you, what do you think you will have to really master in order to achieve that 50 or $100 million?

Do you think it just comes down to repeating the process enough to be able to knock this out of that ballpark? Or do you think it is more of a do you have it more planned out than just we're going to duplicate a process I know works until we're at 50 to 100 million, does that question make sense? And if so, answer it. If not, I'll say it again, does make sense.

And there are two things that I will have to be able to do, and one is not me doing the work. I will have to be disciplined to empower others within my organization to do the work, and I will have to be disciplined to make good selection decisions. And I know you've seen this because you've run your own companies. The power when One individual that works for you works with another individual directly and you're not involved. Now you're starting to get scale. And I need to do more and more and more of that. So empowering people and having them feel as motivated by my vision and have it become their vision for whatever reason motivates them. That's probably 80% of my challenge to grow. The other 20% is finding and identifying the brands and products because they're out there. But you have to account for failure in products. And as we were talking about earlier about the portfolio of brands and products and continuing to have that product pipeline that you can continue to grow and tap because products also have a life cycle. They won't spike up to a million dollars a month and stay there in perpetuity.

It would be nice if they did, but they don't.

Riddle me this, Brian. My strategy, at least when I started this process, was through acquisition. So I just closed on.

A $2.3 million acquisition, and that is how I'm building my Procter and Gamble. So why did you decide to build rather than buy?

I've not excluded buying. I've not closed any transactions. I've had some conversations and some opening discussions, oftentimes with the right people and processes, although this may change. But for now, oftentimes it's less expensive to build and grow your own brand. There are good points to acquiring. There are also. You also get baggage and.

You may bring in some good products in the brand. You may have to bring in some not so good products if you're acquiring an entire brand. But I don't think there's a right or wrong answer. Just as that works for you. I have chosen to deploy my capital that I have in identifying, commercializing, launching and growing products of my own. And you know, if the right opportunity comes along, I'll figure out a way to make it happen as well. That's entrepreneurial flexibility there.

Well, Brian, I love what you're doing. Congratulations on all the success that you've done and you continue to do. I don't know if there's a place where people can follow you, but if people wanted to, where might they do that?

Very simple. Briancrieger.com Brian with an I Krieger C R E A G e r Brian.

Krieger.Com well, Brian, I hope you get that Proctor Gamble of the Internet and I hope we both get acquired so that you can buy whatever Atlanta team you want and I'll buy the Cleveland Indians and then we can battle it out in the World Series.

Sounds like a plan.

All right. Thanks, Brian.

Thanks, Ryan.

Brian started just a few years ago where he just had an idea, had no physical products and then he built a million dollar business and now he has a multimillion dollar business. And he started by going through our training and getting plugged into the tribe. If you are hearing us talk about these businesses and wondering how do I have one of these success stories, then you need to go through the brand builder bootcamp. Go to freedomfastlane.com Bootcamp it's our training to go from idea or no idea to selling successfully within about 90 days. And then if you have physical products already selling and you want to be around other seven figure business owners, you want to be around investors who can help you with capital, you want to be around retail partners who can get you into retail stores, you need to be inside of our incubator which is called the tribe. Go to freedomfastslane.com tribe for full details on that. That is where you're going to meet the people who really help you grow. Whether it is audience leaders or it is people who are doing cool things on Facebook or it is other multimillion dollar brand builders or it is the person that can get you into that retail store or strike that deal. They're all inside of the tribe. So head over to freedomfastlane.com tribe and you can apply to join us inside of our incubator. Hey, we always appreciate your subscriptions on itunes. It's free, it helps us rank higher and it ensures that you never miss any of the goodness here. So if you're not subscribed over on itunes, let's make this official. Let's quick kidding around. Let's, let's, let's get married. Hit the subscribe button on your podcasting app and make sure that you let anyone you know who would find value in this episode that they need to go listen to it. Thanks for listening to the show. We'll see you on the next episode.