Big Profits from Buying Craigslist Book Royalties

Welcome.

Welcome to episode 11 of the Kerner Office. This is one of my favorites. It was completely different from episode 10 where I covered 13 questions in only 31 minutes. Today I covered four questions in over an hour. But I think all four of them were super high quality. The first guy I spoke to was named Nick and he was really interesting because he invests in book and music royalties and he makes a killing. I think you'll really like that one. He didn't really have a question. He's crushing it. But I just wanted to learn about book and music royalties and how you can make money passively. So that was cool. Next guy was my first caller ever. The first caller of episode one, Brandon. He bought a street sweeping business in the greater LA area. It's been three months. He's crushing it. He has doubled his sales since he last spoke to me. He's implemented some of my suggestions and we had an amazing call and I'm really excited for him. Next caller asked about how to grow his dashboard business. Not a car dashboard, but like a digital dashboard. So let's say I own a bunch of short term rentals and I want to see their performance all in one place here. He charges thousands of dollars to put that together for real estate fund owners and really any business owner that wants to see all their metrics in one place. So he didn't know how to grow and so I helped him come up with some good ideas. And the last caller was really fun. It was a very unique caller because he wants to develop a physical product. He's a tinkerer, he's engineer, he's an aerospace consultant and he wanted some ideas on a product idea that he has and how he can sell it on Amazon, Shopify, Facebook, Marketplace. He left the conversation really enthused. I left it really enthused. It was a great call. So four callers in total. Episode 11. Hope you enjoy. Thank you, Nick for joining. So Nick is a little different in that he didn't really come to me with a question. He just emailed me about what he's doing and he's buying book and music royalties. And I thought that sounds really cool, let him want it. We just wrote down about that for a few minutes on my show and he said great. So welcome Nick, to the Kerner office.

Thanks for having me, Chris. I big fan and yeah, excited to chat about some interesting investments today.

All right, me too. Thank you, by the way. And tell me approximately how many deals you've invested in so far.

Let's see, probably done about 10 or so, and then hold about 6 or 7 both personally. In between, we have small little friends, family investment fund.

Okay, and then what dollar amount are you investing in each of these on average?

These could depend from, you know, as low as 20 grand, up to 100, 200 grand overall.

Okay, so I should probably back up and I'll let everyone know. We were already talking and I forgot to record. So I'm going to ask Nick to repeat a couple things. So just tell us briefly what the thesis is with investing in book and music royalties. Why do you like it compared to more traditional things like the stock market or real estate? And what are your goals moving forward with it?

Totally. I like it because it's weird and a lot of people don't do it. And I like obscure investments, but more specifically, it's uncorrelated returns. So stock market goes down, you might cancel your country club, but you're probably going to keep your $10 a month Spotify playlist. The yields are pretty attractive. It's protected in the sense of it's intellectual property, so you get revenue for the life of the author, plus 70 years. And a lot of these songs have really good staying power if you buy them some amortization tax benefits. And then the industry as a whole, there's a lot of pressure in support of artists getting paid rather than some of these big universal Warner companies. So there's a lot of kind of upward pressure, and we're buying those same rights from a songwriter or producer. And yeah, it's not very volatile. It's not very crazy. Pretty similar to a corporate bond in terms of kind of the risk structure. Yeah.

What would you say the annual yield is on your 10 investments on average? And what's like the best and the worst?

We are doing low double digits. It's fairly stable, growing slightly, I think, on kind of the. The group money that we have, we're about like 12% a year.

Okay, and then what's the best and worst out of that bunch?

Yeah, the best is the. I bought a book asset off or book royalty off of Craigslist, like 10 years ago. I bought that for 35 grand, and it was paying 12 grand then. And that's doing 16,000amonth, or. Excuse me, 16,000 a year. I wish it was a month currently. So that's my best performer.

Okay. That's probably like the best opener of any party story I've ever heard. Yeah, I bought this book royalty off Craigslist for 35 grand once. So you paid 35 grand? And it's paying you 16 grand a year today currently?

Yep.

And did you, you just randomly found it on Craigslist or.

How were you.

How did you find this?

Yeah, yeah, I was. Few years into my career, I bought 1% down condo and then remodeled it myself. Got a 90 grand HELOC and I was like, I need to deploy this capital as quick as possible. And my other buddy who I do this with, he's a cfa, one of the kind of better analysts in this space, worked at Royalty Exchange, which is where ebay for these things. Music royalties and book royalties are cool investments. So I posted on Craigslist buying oil and gas royalties, music royalties, I guess. So that's the post. And I just kept posting that. And this guy reached out to me and he said, hey, I'm moving to Alaska to go fly planes and fly fish. And I used to be a literary agent and I want to sell you this thing. I was like, all right. And he gave me about 120 pounds of paper for due diligence. I didn't really know what I was doing, but got some upwork attorneys and figured it out, wrote him the check, that was it.

You were my kind of guy, man. Like, I swear, you're the same. This is totally something I would do. Holy cow. Okay, what year was this?

Let's see, maybe 2016.

Okay, so you're just having this one off conversation with a friend and he's, you've got 90 grand to put into something and you've got this sense of urgency because it's burning a hole in your pocket. And coincidentally your friend says, look at royalties. So you go to Craigslist and you post in the looking for royalties section, which should exist apparently. And this guy wants to move to Alaska and he wrote a book then.

No.

So he was the agent for a best selling author. So that author still puts out. It's C.J. box. So he does western kind of crime books and he puts a new book in the same series out. There's been a few TV series. Yes, good, good books. But he had an interest in the first six because he was the first agent. And then that author has moved on to a new agent.

Okay, so now, so for these first six books, the original author gets nothing for them. Correct.

The author gets a considerably larger check for the agent. The literary. The first agent. Yep. Had a 7.5% interest in the net income of the books. And so he sold that seven and a half percent interest to me. So he doesn't receive anything. He got his Check. And he's fly fishing and flying around in a plane, which sounds awesome. Okay.

All right, all right, Sorry. So he just needed to get liquid so he could go fly some planes. And he. What do you think the gamble was that he took like that this. These first six books were past their prime or did he just really need money and he wasn't even taking a gamble and he knew he was selling something pretty good.

I think he knew he was selling something pretty good. It's obscure in the sense of there's not anywhere to go buy these things, especially for a book that's music. Trades fairly regularly. Books, I don't know where I would go sell that if I needed to. And he. I guess it's all checks. There's no direct deposit for this book stuff. So he's like, where I'm going, there is no mail and I would have to fly hundreds of miles to go get the mail and deposit the check. So that was his main issue.

You lucked out. So you lucked out. In a sense. You did. Because the fact that logistics even played a role in this is so funny. Like, how many places can one move to where there's no mail?

You know, I don't know.

Yeah, I got an incredible deal and I had no clue. And it was scary for me because I'd never written a $35,000 check.

Yeah.

In my life. So I'm like, can I buy this? Is this actually something that you can purchase? Yeah. So, yeah, it all worked out and it's still growing, so I'm stoked on it.

Geez. So at the time that you bought this, what was he receiving per month? What did you think the ROI was on day one first? And I think you told me this in the beginning, but I can't remember versus what it is today.

It was. So it pays twice a year. It was paying roughly $12,000 a year back then. So I knew I was getting at a three times multiple. Okay.

It's like 3x multiple. Okay. Perfect man. You can go to Omaha, Nebraska and buy an H Vac business for a 3x multiple and then start driving all over town swapping out condensers. Or you can post to Craigslist and Send a stranger 35 grand and hope and pray that you get a passive 3x multiple. This literally is passive. Right. Like, quote, there's no such thing as passive income. But could you get more passive than this?

I do nothing. So no, I don't think that's possible.

Wow. Okay. So this kind of whet your Appetite and you're like, why even invest in other things if this exists?

Yeah. More realistically, everything else you buy in this space is not as good as the first one. So if we're buying now, a really attractive price might be five, six, seven times multiple. And for really high quality things, you're paying closer to 8, 9, 10. So it's still attractive returns. But this isn't the. Go buy a business at three times and see 40, 50% IRR or whatever.

Now what was the worst one that you've done so far? And do you think there's a chance it could turn around?

Yeah, we haven't bought anything that's. There's a ton of junk out there. So you go on royalty exchange, like most of the stuff's junk. So there's a big decay curve and you gotta look at is this recurring revenue from Spotify. So you buy something that's old and stabilized. You know it's in someone's Spotify playlist, they listen to it once a week or whatever and then it's pretty consistent. So we haven't had anything that's like a clear loser. We've had stuff that has pretty much been flat or slightly growing. And our due diligence process has been pretty good to pick out stuff that does what we expect it to.

Okay, is royalty exchange the de facto place you shop for these nowadays?

No, we go through brokers. We look on royalty exchange just because there's a lot of deal flow there. But stuff tends to be more expensive than we can get it off market. Which off market is different in that sense?

Yeah. Do you think there's a business opportunity here for someone to create a more streamlined marketplace? Or surely you've thought of opportunities to make this industry more efficient.

Yeah, from an efficiency play it would be do it. There's a lot of companies that have tried that. And I think the biggest thing, the challenge is the actual deal flow and transacting these. Because once you say, hey, we got a deal, you have to go say, hey, I've got one and a half percent interest in this song from a producer side and then a songwriter side. And then none of this stuff was ever made to change hands. So then you go to Warner and it can be like a multi month process to just say, hey, the ownership has changed. So yeah, there's some models out there of crowd vesting and exchanges. I don't know what I would do. I, I would probably just raise a bunch of money and then go allocate it and go with a Fund model, I feel.

Do you ever study the Lindy effect or think about that? Are you familiar with the Lindy effect?

Give me the.

So the Lindy effect is basically the principle that however long something has been around is as likely as it's going to be around in the future. So if you buy an H vac business in Omaha that's been around for 50 years, statistically speaking, it will be around for at least another 50 years.

Okay, sure.

Two month. A two month old startup statistically has two more months. So I think of it like this, where if you're buying Bob Dylan, that's a pretty safe bet, which means you're probably going to get a lower return. But if you're buying some guy that went viral on TikTok, it's a gamble, right. But it could be a really good gamble. He could be. He could be dead of a drug overdose in, in six months or he could be the next Taylor Swift.

The overdose would probably actually help the income.

That's. I was thinking that. Yeah, I was thinking that it's just a gamble you have to take. Right. Just like anything. What do you think helped this six book deal that you bought? What do you think helped it improve? Was it a co. Like just a Covid phenomenon or did something happen with the author or is it just. You can't attribute it to anything?

Yeah, so everything. We buy the minority interest. So there's someone else who's got a vested interest in making the songs or the book successful. This author has puts out a new book every single year in the series that hits the bestseller. And so I have the first six and there's, you know, 26 books in the series. It got picked up, Big sky was picked up and turned into a TV show, which is one of the other book series from the same author. And then there was also TV series called Joe Pickett, which is the name of this series. So that got a lot of interest in it. Between the new books and the TV shows, that's been a consistent bump up. So that's where I would attribute the success of the book deal.

Is there a world where you could buy a minority or a majority interest in these rights and then have some sort of an influence over how well that artist or author does? Like maybe you're in the industry and you're able to affect the outcome more. Are people doing that?

Totally. So that's kind of hypnosis. The big one of the biggest investment funds in the space, their pitch is, hey, we can pay 15x16x and we have a whole team of people who will go out there and try to place this song or increase its publicity and that's their strategy. And you probably hasn't worked out as well as they thought it would, at least how the numbers show.

But yeah, maybe if they overpaid for stuff thinking that their effect would be greater than it actually ended up being. Especially if you're doing it at scale.

Right.

Like you can only promote so much.

Totally.

Now what do you think? Before I hit record, we were talking about suno.

Yep.

Which Suno is like this AI music generator. How do you think that plays into this at all? I'm sick of hearing people say AI is going to disrupt this and that and then we learn actually like people are pretty important and AI can disrupt a lot. But I think that I look at it like self driving cars. There's that last 5% will take as long as the first 95% did to disrupt. So on one hand it's what is AI going to do to all these rights if you can replace Taylor Swift with a click of a button? But the other hand it's how easy will that be? What are your thoughts on that?

I'm with you. Just like ChatGPT now, of course, the quality of writing is not there. I listen to a Suno make a Suno song and it's fun, but I haven't listened to the Suno songs on my playlist ever. Yeah, I think it's, you know, night and day difference between a quality produced song with someone who's experienced and good background singers and good producer versus, hey, the computer is gonna go make some of the stuff. I think it's wildly powerful, but I think we've got a long time until we see stuff that's like actually on par with high quality music today.

Yeah, I actually, when I first discovered Suno, I couldn't sleep that night. Not because of Suno, but so I stayed up, I came here in my office and I pulled out my MacBook and I'm like, all right, how can you use this to go viral on Spotify? And I went down this rabbit hole and I found all these articles about people that had been doing this and trying this for months now and, and some with some success right there. There has been some success and Suno gives you all the rights like you, you could make a hit on Suno legally and upload it to Spotify and make a lot of money on it. And I forget what the roadblocks were, but I don't know, I just Think we're still too early. Like, I look at this phase of AI as like the. When I first got an iPhone, the best app was like this fart noises app.

Oh yeah.

And I feel like we're still there in AI and it's like fun and it's quirky. But then Uber came along years later and, and like harness like the underlying infrastructure of the iPhone to really change the game. It wasn't just like an app that appeared useful or funny on the surface. It was like the actual utility in the technology.

Totally.

And I feel like that's what AI is doing. Like it's. The plumbing of AI is really helping boost the, the capabilities of companies large and small and it's leveling the playing field totally more.

Yeah. And there's probably still those second third level effects out there where you could, you know, take advantage of AI. So maybe it's not making songs, but it's. I'm going to go make ringtones or noises or something else that there's an opportunity for.

Yeah. Like my newsletter talked about just getting someone's attention with a custom Suno song. It's just like replacing a quirky subject line of an email. And you're not going to sell them the song. Maybe you do, you're just using it to get their attention. Especially if it's someone who's over 50 years old and probably won't know about Suno for another three or four years. It's really novel and unique.

Totally.

Yeah.

Perfect example to separate yourself, get buy in and exactly like you said. If I can do this, imagine what else I can do and add a ton of value to someone who's out there doing H vac every day but would like some more business.

Awesome, Nick. Thank you for coming. If anyone wants to ask you questions, I don't even know if you want to answer them, but if you do want to answer questions about royalty investing, where can they find you? Twitter.

You can send them on Twitter my way. Happy to talk about it. It's fun stuff. Yeah.

Okay. What's your handle?

It is my first name and last name with the first two letters switch. So it's pick P I, C K, Natric, N A T R I C, K. Okay.

And we'll link to it in the show notes as well.

Cool. Thanks, Chris. I appreciate everything you do.

Yeah.

Keep up the awesome comment.

Thank you. Thank you, Nick. I appreciate it. Have a good day.

Cheers.

Bye. Hey, Chris.

Brandon.

How's it going?

How are you, man? Good. Been a couple months.

Yeah. Yeah, we're a few months since we last spoke and yeah, things are going pretty well. A lot of what you shared seemed, I don't know, mind blowing stuff at the time, but now it makes a lot of sense.

Good. So you were on my first episode, right? Or was it second?

First episode, yeah.

Okay. And you were like my first caller of my first episode, weren't you?

I think so, yeah. I think we got disconnected or something like that.

Yeah, yeah. That's crazy. And it's funny because it was like, this is a 10 week test, yada yada yada. And here we are on week 11.

So yeah, here we are.

That's awesome.

So, yeah, thanks for doing this and thanks for the time.

Of course. So let's get everyone up to speed. So this is as I read your submitted question and as I remember it, you purchased a street sweeping company in Southern California and you were selling some residential, some to HOA construction companies and you were just starting to get into it, right?

Correct. Yeah, yeah, I was about probably four months into running the operation and we'd had it probably since May last year. So we're about coming up on a year mark.

Okay. All right. Now what did I suggest? What was your core question and what did I suggest back then?

I think I was just looking how to grow it. This is my first run at entrepreneurship. I just finished a baseball career and came across this business, low risk. And so you, I think you took a look at our website, you took a look at our Google, my business profile you mentioned. Just get some reviews, start working on SEO, double down on the Google Ads that that had been working. So keep doing what's working and then figure out some sort of cold outreach which has been good. Like we've just found some associations locally and all that. And yeah, we're just doubling down on all that.

Awesome. So what type of cold outreach have you done?

So a lot of it has been just getting lists from, I think outscraper things like that. And whether it's homeowners associations, commercial property managers. And then I joined contractors association that's like local and so that'll get our construction side going. So it's just a mix of cold calling, cold emails and following up on any past leads, things like that.

And do you have any stories like a specific customer or instance you remember of a time that cold outreach worked? And what is that story?

The cold outreach has been slow. One of them we have, we have a big construction company in our area that it could lead to a lot of jobs and they weren't even aware that we were a company. And yeah, just a phone call led to that. And then I had a phone call with a gentleman that he owned a.

Parking lot in our area.

And I asked if he had some other properties as well. And he pointed me to. Yeah, he wanted some pressure washing for a parking garage that's at near lax. It's like a seven story garage. Working on getting that one, hopefully. And that would be probably a month of revenue just in itself. Yeah, that'd be nice.

Like it would be the equivalent of a whole month of revenue for your company.

Yeah.

Wow.

Yeah.

Now do you do?

And we would outsource all of it.

Nice. That was my ex. So you don't do pressure washing, you would just sub it out?

Yeah, yeah.

Now what on that job specifically, what did the unit economics look like? What would the top line be and what would it cost you to sub it out?

So it took a bunch of research, but I found that I could get someone who I could trust not to like flood this thing and put me in a lot of trouble who's done these size jobs before. And it probably would cost me about 30 to 35,000. And I actually had asked the customer like, hey, have you done this before? I don't know if you understand how big of a job this is. And he said, yeah, we did it two years ago, but we only did half of it and I think we did it for 30,000. So he gave me the number, which.

Was really nice, very helpful.

And yeah, so I quoted him, I think 55 or something like that for the whole building, which I confirmed with a bunch of other guys that are, I think mostly through Twitter. And they said anywhere from the 50 to 60 range would probably be based on the square footage and everything.

Man, pressure washing, parking garages. I didn't even know that was a thing. That is a lot of money.

Yeah, that's the next avenue that I want to add to so I don't have to outsource it all. Because we've gotten probably four or five leads on it in the last two months. Only one of them has landed and it was a pretty small job. So I'm waiting until it makes sense for us to invest in that.

What would it cost you? So he didn't balk at the 55 grand?

No, he. He has to. His thing was he has to go get it approved by his VP or whoever is above him. And he said they were planning for either mid to late summer for this job.

Okay, and what's it going to cost you to outsource that?

About 30 to 35 man, for everything.

So you have to pressure wash the entire thing or they will.

It's most. Yeah, it's mostly pavement, so I have to sweep it came from a sweeping job that I, I would sweep it first, get all the debris and then. Yeah, they would. It's basically get all the oil stains up and then it's mostly just the pavement, not any of the building or anything. Okay. And then making sure all the gum and just stuff that gets stuck over time.

Now is this just for aesthetic purposes or is there like some regulation requiring this?

I'm not totally sure on the parking lots, like what is regulated as far as the pressure washing. I know the first couple of levels are like their VIP section. So he was like, hey, I need like a deep clean for this. So I think it's more for looks of it, but I think there also is like an element of not having to invest in more pavement resurfacing and all that over time if you maintain it. So I think long term it saves you money. I know that's the case for sweeping, at least for asphalt and all that stuff. But so I would say there's some sort of benefit other than just looks.

Man, my mind is buzzing with this. I feel like you're an. You're in la. How many parking garages are in la? Like this is such a high ticket item. You could pay a full time guy to just chase down these parking lot owners and chase down these five figure jobs all day, every day.

Yeah, that's what I'm realizing. So we're in Ventura about probably an hour and a half. Yeah, hour and a half outside of la. But yeah, the. If I, even if I could get these jobs and sub them all out like it would be less of a headache and pretty decent cash flow.

So I love the model of subbing everything out until you, you feel comfortable enough to do it yourself and you've de risked. So we do this in the tree business. We sub everything out. We literally don't own a chainsaw. But at this point we're looking to buy a tree company in DFW that doesn't sub anything out because we feel confident enough that we know how to run the business that we could just boost our margins. So our perfect scenario is buy a cash flowing tree business that's doing a million dollars a year in net profit, come in there, put our marketing on it, put my operating partner on it, who's an amazing operator and just boost the margins Boost the top line with better marketing. And so back to you. I think street sweeping and commercial pressure washing go hand in hand because you're going to have to do a run through this first anyway. And I feel like anytime you do a job like this, you're going to have to run through it. And so if I were you, I would get a. I would go to rionomy, which is a website that I like to use for scraping data. And honestly you can scrape with a virtual assistant everything you need during their one week trial. They're not going to like me saying this, but whatever. You get a. Because it's super expensive, you get a one week trial.

Okay.

And I have a VA that I can refer to you that I've used for this. And he can go in and you can make a very specific search for LA County, Orange county, whatever you're doing for parking garages or for parking lots or whatever it is, maybe just everything over an acre or under an acre and scrape it all out. Get as much data as you can and then just start hitting that list with someone local. Not a va, either you or a partner or an employee and just start learning. Learning how much of a need there is for this. I think four leads over two months for something that's this high ticket is pretty dang promising. I usually try to dissuade them from expanding into other verticals because they usually have a 1% market share of the vertical that they're already in. But from what I understand this A goes hand in hand with what you're already doing and B is much more high ticket because what would. If you were to just sweep this seven story garage, nothing else, what would you charge him?

It might take maybe 5 or 600 bucks, 100x difference. Yeah, yeah.

That's crazy.

And the capex for the pressure washing is much lower and replacing something on my sweeper, if something goes down it might be a $15,000 expense. So that's the real part that's difficult with this. But yeah, this. So the person I was subbing it out to, he actually reached out to me and I found out he'd been doing this for about 10 years and he's about. He said his top line this year will be around 7 to 8 million just with 80% commercial and then some residential.

Holy cow.

So is he open my eyes to what's there.

Is he specializing in parking garages or just any pressure Washington, any pressure.

Washing, sandblasting. So like getting any of the stenciling up. They do like Some fleet washing for commercial tractors and vehicles. So they do a little bit of everything.

Yeah, I have to imagine that it's really easy to sit here on this call and be like, oh yeah, do pressure washing. I have to imagine it's very competitive, especially in la. But the fact like if you were to get on these cold calls and say we only do pressure washing for parking garages in LA County, I feel like that sells so much better than just another pressure washing guy calling them. And first of all, I doubt that any pressure washing guys are calling these guys because they're probably pretty busy and they're like, people don't want to get on the phone. So they're not competing with cold calls. Right.

I had to call probably 10 people to find someone and each one when I sent them the address they said, no, that's way too big for me, I can't do that.

Perfect.

And yeah, so it took me like this guy told me there's probably three or four within southern to Northern California like that could handle a job this size. So yeah, I think the competition definitely goes down once you start getting into those bigger jobs.

What do you think a truck would cost to do jobs this big if you were to buy it yourself?

The guy told me how he would do it and it was two trucks. I think the equipment, if you're getting it like new and gonna keep it for a while would be anywhere from 40, probably 35 to 40 grand per truck. Like with a truck trailer, everything, I think you could probably get it around 35, 40, so maybe 75 grand. To be able to do two crews on a job like this that'll pay.

For itself in two, two, three jobs.

Yeah.

If you were to only sweep this, how often realistically, like I know how often you'd like to sweep it. How often realistically would someone invite you back to keep sweeping that only sweep it?

Would this like a parking garage? Not. It would only be when they pressure wash because they're charging people for airport parking and so they don't want to. If I go and sweep it, it's going to be completely full and we're not anything done with it. So they're going to have to empty the lot for us to pressure wash it one or two levels at a time.

Interesting. Okay. How often do normal parking lots need to be swept?

A normal one? It depends. Like a commercial grocery store can be. I had one that's every night. But that's a very low margin. You're. It's just a race. The nicer Communities are probably once a week or once every other week.

Okay. I'm just thinking, I know this isn't even why you called, but I'm latching onto this because it's a, this is still recurring. Like you don't give up the recurring aspect. It's less recurring. It might be 10x less recurring, but 100x bigger ticket size. So to me, this is the exact type of asymmetric risk that you should be taking. You don't have to take any risk but your time and your pride to talk to these guys and at least learn. And then once you've subbed it out five or ten times, you really don't have a risk at that point. Because those five to 10 jobs, hopefully you've been the one interfacing with them. You've got, you are the one with the relationship with them. And they're going to recur in one, two, three years.

Right.

So even if you buy a truck today and you never get another job, you're still going to be able to do those jobs again in one, two or three years.

Yeah.

Am I missing something or is this a big opportunity?

I think it's a big opportunity, which is I've been on the whole YouTube rabbit trail for the pressure washing since this came up. The other pressure washing leads have been like much smaller, but they're still, you know, anywhere from 2,500 to five grand for these commercial jobs. And yeah, I mean, with a sweeper truck, like if I'm sending them to a construction site, I'm pretty happy. If each truck is doing about 2,500 a day, that's like best case scenario. So yeah, to have a pressure washing job that I can do after hours, pretty low paying employee, and to be able to do that and get three or five grand per job, I think there's definitely a big interest there.

Yeah. Okay, think of it this way, because I've talked trash on pressure washing in the past because it's one of the very few home services that have gone viral on TikTok. So there's all kinds of high schoolers and college kids, which I love, out there, buying pressure washers from Home Depot and hustling. And I love that. Right. I don't love it as a competitor, which is why I'm not going into that business, but I love that they're doing it. So let's just take this business and compare it to something with less competition like fencing. Let's say every year in the fencing industry you've got just to keep the numbers clean. 100 guys coming into the market and 50 guys going out of the market. Maybe they're closing their business entirely. And let's just say that's like the average attrition into and out of the fencing business. Statistically speaking, unless Americans are getting 50% more fences every month, then at some point in the future those companies are in for a world of hurt and a lot of competition. Let's say in the pressure washing industry it's three times that. Unless Americans are getting 50% more fences every month, then at some point in the future those companies are in for a world of hurt and a lot of competition. Let's say in the pressure washing industry it's three times that because it's gone viral on TikTok and fencing hasn't. Let's say you've got 300 coming into the market every month and 150. What that says to me there's actually a barrier to entry with what you're doing because of the ticket. How much it's going to cost to buy one of these dang trucks. Right. And so all else equal, if the top of the funnel is three times bigger, the top of the funnel for the $50,000 truck parking lot pressure washing industry is the same size. Which means that if you're in an overall industry that's much more crowded and you find a subsegment of that industry that's ignored, then you will statistically be much less crowded than an average industry like fencing. Does that make sense?

Yeah, because yeah, definitely.

I would wager that exactly 0% of these guys being inspired from TikTok are spending 75 grand on a truck. But there still is a growing need for, for that market because the economy's growing. And so if you're the guy that takes that on, then I think you'll be even better primed for success than someone starting a fencing business which has not gone viral on TikTok. Right.

Yeah. And I think that's been my hesitation is I don't think we would do or I wouldn't pursue residential pressure washing unless I just got leads out of nowhere. But it, I would focus on these higher ticket items or the sweeping.

Yeah, yeah. So if I were you, I would make, I would buy a different domain name entirely. Just something cheap. 10 bucks. Regarding parking garage pressure washing. And maybe that's what it's called. Parking garagepressurewashing.com or LA Parking Garage Pressure washing. And it's a long domain, it's not pretty. But then take your credentials. How long has your company been in business like before you bought it?

About 30 years.

Perfect.

Leverage those credentials on your new landing page and talk about on this new landing page how all you do is LA county parking garage pressure washing. And it can be a simple website, you can put pictures in there, it could be a one pager even. But then when you get on these calls or I would even throw Google Ads at this landing page and just see what happens because there's probably very low traffic but very low competition on these Google Ads and just separate that and you could put on there like a subsidiary of your current business name or something. I would really explore that while you're doing everything that you're currently doing just to see what comes from it.

Yeah, it would take one job basically to pay off any sort of thing like that and two jobs probably to pay off all the equipment.

Yeah. And there's thousands of those things in the county, I'm sure.

Yeah.

What did we not get to that you had a question about?

With the street sweeping high capex, we've gotten it to about 60 grand a month and it's about I would say 8 to 12% net margins because we're definitely investing a lot into making sure the equipment's back updated. We got a lot of old equipment when we bought it, ads, all that sort of stuff. So personally I have a decent Runway financially a couple years or so and this is my first go at entrepreneurship. So I don't necessarily want to take my, my chance of two years or whatever to focus on something that might not be my highest leverage or best opportunity. But it was just the opportunity that kind of fell in my lap. I have a background obviously in baseball, played 10 years professionally. I haven't done anything really with that or growing like a brand or anything like that. So I don't know, I'm not really sure if I should just continue just roll on this, learn all the skills of running a business at like marketing, sales, all that that I didn't know beforehand or if I should continue to pursue other things. I know you've had a couple of segments on the shiny object syndrome lately, but yeah, I'd be curious to hear your thoughts.

I think that you are in the exact right place. What was your. If you're at 60 grand a month today, what were you three months ago when we first spoke?

I would say probably 28 to 30 at that point. And then when we bought it we were at about 15 to 20.

Okay. So I'm a big advocate of shiny object syndrome. As I talk about. But I would like there's a difference between shiny objects inside your industry and outside. So like in my industry quote is entrepreneurship. And so I'm always chasing shiny objects and I have a vehicle called co founders where I can place these shiny objects with operators. Right. I think you're doing something really special and amazing. And the fact that you have a 30 year old business means that it's likely to stay in business for another 30 plus years. Statistically speaking, you're in one of the biggest economies in the world that's a growing economy that's by the ocean, which means it's not going anywhere. It's not as prone to market bubbles like Phoenix or Vegas. I would imagine there's dozens of other competitors you could buy in that market. I would lean hard into street sweeping and or street sweeping plus business for another 30 plus years. Statistically speaking you're in one of the biggest economies in the world that's a growing economy that's big by the ocean which means it's not going anywhere. It's not as prone to market bubbles like Phoenix or Vegas. I would imagine there's dozens of other competitors you could buy in that market. I would lean hard into street sweeping and or street sweeping plus like commercial pressure washing because it's not going anywhere, it's not going to be disrupted by AI. One day there's going to be a self driving street sweeping truck and you can buy it and you can cut your cogs down.

Right.

Like you are almost immune from technological advances. In fact they're only going to benefit you. So I would keep doing exactly what you're doing. And when you get to the point where you feel like your growth has stalled then like commercial pressure washing because it's not going anywhere, it's not going to be disrupted by AI. One day there's going to be a self driving street sweeping truck and you can buy it and you can cut your cogs down. Right. Like you are almost immune from technological advances. In fact they're only going to benefit you. So I would keep doing exactly what you're doing and when you get to the point where you feel like your growth has stalled, then start looking at acquiring other businesses in the same space. Maybe you acquire a commercial pressure washing company instead of starting one from scratch. I would also take your customer list like as soon as possible and reach out to them and ask if they have any pressure washing needs because you could have a whole other 60 grand a month of revenue already in your email list.

Yeah, okay.

That's really.

And start looking at acquiring other businesses in the same space. Maybe you acquire a commercial pressure washing company instead of starting one from scratch. I would also take your customer list like as soon as possible and reach out to them and ask if they have any pressure washing needs because you could have a whole other 60 grand a month of revenue already in your email list.

Yeah, okay, that's really helpful.

Yeah, that's what I would do. But I think you're doing something really, really special and I want you to come back on in a couple months and let's talk again.

Yeah, yeah, that'd be great. I appreciate it.

Okay, thank you, Brandon. Good luck. Thomas.

Chris.

What's going on, man?

How are you? Good. Hey, sorry for making you wait.

I appreciate you having me on. It's good to see you again.

Of course. You're in Birmingham, right?

Yeah, that's correct. Okay, I'm in Birmingham. So it's funny enough tonight I have to think about what I'm going to eat for dinner and it's either Taco Casa or Sirin.

Oh dude, you gotta go to. You got. Oh man. Eat it in memory of me.

I agree.

Oh, I agree. So good.

Yep.

Oh man, I want to go back to Alabama just for Sirin.

I'll send you some.

It's funny you say that because I had a friend that visited From Utah like 12 years ago and he's a big foodie and I took him to Surin and he was addicted and, and he sent me. Honestly, this was so long ago. I think he mailed me a check for $35 to buy some Namtok beef and ship it to him. And I never did. Like I kept his money. It's so much friction to go into the restaurant and dry ice and all that. So I owe him after inflation, probably about $3,000 at this point.

But it's a good investment for him.

It is. It's good.

He did all right.

It's good. All right. So you've got, you've got this dashboard business. So tell me. I read your question, but let's talk it through. So let me know if I understand your question correctly. You have a startup, fairly new, that creates dashboards for any business owner, but your first kind of case study was for a short term rental business owner that really loves it because he's able to see the performance of specific metrics across a dozen different platforms all in the same place and across a few different properties as well.

Yep, that's correct. And so they're actually a small Fund that's I think around 80 million doll assets under management. And they just operate in experiential hospitality is what they call it. And they're pretty well known too. And so we felt like we got, we proved that there's a demand for this, right? Because the platforms they were on, not only did we figure out we could provide better reporting than them by just actually digging into the guts of the API, but it's. We're providing them better data. Like, we even found mistakes that their platform was making on their metrics they were providing. So we're like, our dashboard is the gospel to them compared to their, the actual platform they run off of. So it was like, our data's better. And so surely we could go after anybody, right? We would be happy to take after any customer because it's APIs combining the data, it's that full business intelligence kind of ELT plus kind of pipeline. But yeah, just the fact that we had success with that firm, we were like, why don't we just lean into that and use their, their big name to try to provide some authority? And it seems to have worked. I've gotten some DMs from people that, in similar industries and people who have told me they're impressed by it by saying a few things about it on Twitter. We just haven't gotten like a ton of inbound yet. So I'm thinking, all right, I got to go on the offensive. I've never really launched anything before. So I'm trying to figure out, like, how do I find these funds or do I pivot to somebody else? Am I, do I need to be sending the emails? What else should I do? Am I pricing it correctly? It's like you're working through all that.

Stuff at the same time.

Inevitably.

Yeah, exactly. Pulling levers at this. You don't know what's working and what isn't.

Exactly.

So, exactly. Let's talk about your unit economics, because that kind of helps drive my decision making. Because if you sell a $20 widget that costs you $10, you have to be extremely efficient with how you promote that thing. But I know this is a higher ticket item, and so that'll help drive my decision making on how much money you can spend to acquire new customers. So what is, what, what are your cogs? How many hours? I know you don't really know yet. It's still new. Ballpark how many hours? And it's all labor, I assume maybe a little bit of zapier or tech on the back end, but how many Hours to put a really clean dashboard together for an average size customer.

Yeah, for an average size, I'd probably say 10 hours. However, we've got a gentleman who's become sort of my right hand man on this and we were basically saying will agree to probably just a flat rate per dashboard because if it takes him five minutes to build it, I don't care if it takes them 20 hours, I don't care. Like we'll just flat rate it. And that way it's very. He knows exactly what he's getting into. So we were just thinking we'll pay him a thousand bucks dashboard. And he's pretty happy with that. And then as we grow and he's doing other things, like we would also put him on some salary because he'll be helping me do operational stuff as well. Because he wants to get out of his job and he wants to move. And this is like his ticket out of that. If it's 1000 bucks and then there's a little bit of tech cost. 250 bucks, maybe a tech cost. Just for easy math, I suppose we're thinking of charging 3,000 for an implementation fee just right off the bat. And then we just capture recurring on the back end to maintain, to auto send the reports, to make changes and stuff. So if I'm sitting at 65% gross margin and then I also have recurring on the back end, that's very high margin. Then I almost think to me it's, I don't care if my cogs are, are 99% of, because I get the recurring on the back end. So that's in general how it works.

How much is the recurring and is it just like a service contract to fix things as they break and maybe months go by with nothing breaks.

Correct? Yes. But then also we say, hey, if you want to add a dashboard that's on top of your existing data sources, great. Like we can throw that together because we're already pulling the data. It's just manipulating it a little bit more. If they were doing something like in the case of the real estate fund we worked with, if they bought a new property and brought it online, it would just be a small $500 fee to take the same dashboard but implement it with a new property. Cause we got to go pull new stuff. So then if they were to add a data source, we might say, all right, we'll charge like a $500 fee or something like that to go add that. Because that's the hard work is getting into that new source and Pulling that data. But yeah, in general we're flirting with price a little bit. I was thinking of 399, maybe 499, but I'm open to ideas. Some people might tell me you should charge 1,000 bucks or maybe I should charge 200, I don't know. Yeah, but I'm thinking like 399 at the moment.

And it also depends on who your customer is. I like that you're playing in the real estate fund space because they have money and most of those costs, if not all of them, they're just passing on to their LPs anyway.

And they do not bulk at the price. Because I've asked a few of them, I said, does this price give you heartburn? And they're like, no, not at all. But there are other people I've asked and they're like you when, when they start like hemming and hauling over 3,000.

Bucks, there's my answer. We probably exactly what other people have balked, like what type of industries one was in.

They were one of the like 8 million global talent staffing agencies. He was running that as well as something else. And he was the main one that balked at the moment. We had some other people that said that they thought it was fine. We've had some people tell us we should charge more on implementation, just depending on the complexity behind it. Yeah, but I'm just trying to keep it simple right now. Just like it's a flat fee capture recurring and just move on and then maybe we can. I've thought about even creating different landing pages for different industries that all go to the same calendly. And if they come from like exactly the real estate landing page, it's I'm going to charge you five, but if you come from this one, I'm going to charge you two.

What am I even here for? That's exactly what I would suggest.

Okay, well so great. So I'm happy with that. But I guess me it's I don't know how to go find these real estate funds. I've got an instantly set up. I can verify leads and I can fire off emails. I figured out how to work that. But I don't know how to go find these people because some of these standard lead finder tools I've used, if I search for real estate or something like that, it's going to pull up like lenders, it's going to pull up property managers. That's not who I want. I want like I want the hundred million dollars and under assets under management, like real estate funds or even PE companies, because we can work with their portfolio companies. So it's like, how in the world do I go find them? How do I get their attention? How do I make them, like, trust me, how do I sell them, et cetera, et cetera. But then also, is this even a good idea? I guess we can go back to the beginning. We even believe that this is a good service to offer. I think it is. I'm biased.

I think it's a great service. I'm a general partner in a real estate fund and we buy two RV parks and campgrounds every single month. And I don't know if my partner John uses something like this, but I bet he doesn't. And this seems like something we could use. And I would be a target customer.

I think.

If you're looking for potential customers, have you looked at Apollo, where you can search for people on LinkedIn by their job title? Because I would go to someone that has the industry of real estate and the job title of general partner, and I bet there's thousands of guys like that.

Gotcha.

And then just upload them all and just fire off emails, hit them with a couple sequences a few days later and just try to hit them. Because I was thinking something like that, but I was like, is Apollo a good Apollo and LinkedIn? Is that the right way? It's just, I just have no idea what route to take because I'm like, there's zoom info, there's Apollo, there's clean leads, there's 8 million tools. Am I even thinking about it correctly? Because it's, I'm ready to hit the ground running and I'm ready to help this other guy get out of his job. And I'm ready to sprint on this because I've got seven other ideas I also want to get to. And so it's, I need to stabilize this one so I can move on to the other stuff.

Yeah, I would use Apollo to get their data, but I wouldn't use Apollo to DM them this pitch on LinkedIn. I would try to get as much because this is. You're going to make one to three grand up front on each customer. And so I would try to reach these guys outside of the traditional channels, even try to get their cell phone number, find them. I bet you anything, 60, 70% of these guys are on Strava. I would look for them on Strava. I know that sounds crazy, but no one is reaching out to them on Strava. Like, so I'm that goes back to.

Your white whale, right?

It does, it does. You were at the conference, right?

I wish I was, but no, I wasn't. But I get your newsletter and I went and referenced it.

Yeah. Talking about it, I talked about this. Like, I. So my Twitter account, I get a ton of dms and I ignore most of them, but I just started on Instagram and nice. The I, whenever I get a dm, there it's, oh, I got a new dm. Oh, I got a new dm. Hey, babe, I got a dm and I'll read it and I'll. I don't respond to the ones that are obvious spam, but like, it's just, it's new, it's exciting to me, and so I respond to them. And so if I'm a general partner that's getting pitched stuff every day in LinkedIn and in my email, I'm gonna ignore most of it. And that's the name of the game, right? That doesn't mean it doesn't work. People make money on LinkedIn and cold email all day, every day. But I would start at those random one off places, especially find the guys that have unique names that are easier to find because then you can cross reference them on Strava and like, you might, maybe you send them a cold email first.

Okay.

And then reference the cold email on Strava and they're gonna feel sufficiently stocked. But that's okay. That's okay.

Yeah, whatever.

Because if, honestly, if you have what they need, and I think you do, then they'll buy anyway and you're just trying to get their attention.

Sure, sure.

Yeah.

No, that's fascinating. And so I guess I hadn't considered it as going after a bunch of mini whales, Right. Where I could potentially like, use, use that strategy. Because I wasn't going after McAfee, right, for this, I didn't need one. I just need 100. And if I get to 100, we're doing great.

The thing is about whales, though. Like, if you go after, if you just take a sample size of 100, there's going to be five to 10 whales in there, Right? You don't, you might not know today who they are. I know this is a fairly new business, but you're going to get one response that's, yeah, we have this $50 million self storage fund, but we're the subsidiary of this company that has a $5 billion multifamily fund. And I could see us using these in all 34 markets that we're in. You're going to get responses like that. And then you're gonna be like, oh, that's a whale. That's a white whale.

Yeah.

Okay, so do you think a thou. Back to the cogs question. Do you think is that kind of what you're talking with this guy, about a thousand dollars flat fee, whether it takes a hundred hours or one?

Yeah, yeah. We've thrown out there and everybody seems to, everybody seems like we're okay with that. It could certainly change. If we're cranking out 20 of these a month, we might adjust, but I would also get em a helper. And so it's, you can get paid per dashboard even on the ones like an overseas analyst helps you on. So maybe it's a thousand for the ones you do yourself. 500 for the ones an analyst helps you with. I want it to be a little bit more like he can eat what he, he kills. He wants to move to Mexico, lower cost of living and do that. So it's, if he makes 120 grand a year doing this, he's living very well and down in Mexico. So he's happy with it. I'm happy with it. That's what we agreed to.

I would suggest that you do this with him. Let's say it's a thousand bucks, but let's say you also lean into real estate or to one vertical and it works. You're going to get insane economies of scale here to where what used to take him 20 hours takes two hours. I would definitely work in a tier where it's, listen, man, when we're doing five of these a week or five of these a month, I'm going to need to bring this down because I'm expecting you to get more efficient. It'll still be a net win to you. So let's say if it takes him 10 hours and he's making a thousand bucks and then it ends up taking him five hours, you'll pay him 700 bucks. So it's still, it'll still be a net win for him. But as the longer you stay in this market and the more success you have, it's just like gravity. There is a law that you will invite more competitors. Even if you're not bragging about it or talking about it or using influencer marketing, you're going to invite competitors and you're going to need to protect those margins. You might never come down on price, but you always want to have that insurance policy to where you can come down on price if you have to, or else you're going to have this really uncomfortable conversation with this guy making a ton of money in Mexico that you should have had months or years ago, but you didn't. So I would just lay that out beforehand today to get ahead of that. Because if he is knocking out this many, it means he's going to get really good at it and it means he's going to build up all this institutional knowledge that will be harder and harder to implant in someone else as time goes on.

Sure. And I guess the other, a little bit of nuance to that too is even like the hard part's the platforms. Once you learn a platform, then it doesn't matter who's on it. And so that's like also the difference maker. So we had a lot of success with cloud beds. In particular was the one we worked on, which is very widely used and we could almost even do it based off a platform. It's like when you start doing more cloud beds as opposed to like real estate funds or plumbing companies. It's like it's cloud beds.

Right.

Or it's service titan as you get more efficient on those. And so that was the other idea I had, was like, if we've had success on cloud beds, how do I go found every cloud bids user like on the planet. And that's like another part where I don't even know if that's possible, but.

Oh, it's possible. It's possible. Yes, it's all possible.

I don't know how to do that, but it's again, like, that's like where I'm trying to, I'm trying to figure all that. This is new to me.

Here's how you do that. You go to upwork and you ask, you post a job asking if someone can do that and just see what happens. It's an asymmetric bed. It'll take you three minutes and you never know what comes in. I, I will say one last thing. I like the idea that you're doing an audit. I think you should test. Maybe it's on a separate landing page, maybe not. I think you should test a lower price point, even if it's with these guys that have a lot of money. Anchor yourself at a lower price point, but with the additional cost of a quote, free audit. Because it sounds like you're, you have to do an audit anyway by nature of what you're doing. And so instead of 3 grand, maybe it's 2,2500 with a $500 audit or 2,200 with $1,000 audit. And I think you're going to learn that the majority of people opt for that audit and if they don't, then you're going to learn that your close rate is higher because it's a lower price point because it's.

Because you're by audit. Just saying, like evaluating your systems, are they any good? Should you maybe move to something cloud.

Based or more modern or is every. It's. Is their data firing correctly or. You know what I'm saying?

No. That's fascinating. That's fascinating.

Yeah.

That gives me a lot of ideas to attack today and next week to start trying to figure out. I'll throw an upward lead on here in a second when I'm in the car with my wife. Just go ahead and throw it up there. Hey, you're a bit of a white whale yourself. We'll build a dashboard view for free.

Okay, awesome.

Yeah, so if you want it, just reach out. You can also reach out to Connor as well.

Thanks, man. Yeah, I'll ask my partner John about it and I'll get back with you. I'll take you up on that.

Cool. That'll work, man. I appreciate the time.

Yeah, let's have you back on in a month and see how it's going.

Yeah, I will. Come on every week if you'll let me. You're going to have to start declining me. I've got so many questions.

Okay, sounds. Sounds like a good time. Thanks, Thomas.

Yeah, talk soon, Chris.

See you.

Appreciate it. Yep.

Hey, Chris.

Hey.

How are you, man?

Doing good.

Okay, so you're a tinkerer, you're an engineer, right?

Yeah, I would say I'm an engineer transitioning to a tinkerer probably. So I worked professionally as an Engineer for about 10 years or so and I've always been jealous of the makerspace people because they get to use that and change their own lives. And so I've been diving into that over the last couple years and in my little prompt, my kind of like moonshot idea is to come up with a product that's sellable, has a good addressable market, and then build a company around it and it doesn't need to be right away.

Mm.

But.

And you have a W2 right now, right?

No, right now I have a LLC and I, I consult through my LLC with a couple of aerospace startups.

Okay, so you're self employed as a consultant basically. Yep. And that, that pays the bills, that covers you?

Yeah, yeah, it's pretty solid right now. I'm actually, I have a little bit more work than I Ideally would have, because I'd love to spend more time tinkering and stuff. But yeah, it's. It's a super solid gig. And part of the reason that I'm not in a rush is I don't want to jump into something that I enjoy less, which I think could be easy to do.

I love talking to people like you that are. I'll just. I'll simplify it and say, you're a consultant. Is that accurate enough?

Yeah.

Yeah. Because it's not all or nothing. A lot of times people have a W2 and they make a lot of money and they're like, I really want to do this, but I don't want to quit. And I'm always like, don't quit because I want to. I don't want to be the person that tell you to do that. But you have the flexibility of saying, I don't really like this client. I really like that client. Let me keep these three core clients that it's the 8020 for me and really build something on the side. Is that possible?

Totally.

Okay.

Yeah, absolutely. And I'm doing that a little bit now. I've done little ventures and even actually the people that I work with are. They're like good friends. So they'll like, let me get away with little interesting ideas. So one of them, for example, I do like structural analysis and design stuff, but I sold one of my clients a whole bunch of 3D printed parts that they wanted on a short time frame, and it was like a great return on investment. I got them to pay for me to get another 3D printer so I could, like, up my production rate enough to get all the parts that they wanted and all this stuff. I decided not to do it again though, because I ended up spending an entire weekend onboarding a new 3D printer and just running the thing all night. So I've dabbled a little bit with stuff like that and trying to figure out what are some other things that I could.

Yeah.

I. Super big pan fan of your podcast because. Yeah, I love all the, like, crazy ideas that you have, but thought it might be interesting to see what happens if you are thinking of that from like a tinkerer angle.

Yeah. No, I don't think I've ever had anyone ask that question. Like a specific physical product idea.

Yeah, totally. Yeah. Because everyone wants to do SaaS.

Yeah. And I get it.

Like, yeah, it's. And there's a lot of easier ways to make money. I totally get it. But I just have always had a passion for Physical things. And I've always also had a passion for kind of trying to improve people's lives in these, like, little simple ways. Something that I just did that was funny is I got a. Like, a programmable outlet that you can plug in and you can put, like.

A timer on it.

And I hooked it up to a space heater. And then so my wife and I have been experimenting with using, like, a heater as an alarm clock, which was. I was like. At first I thought about that, and I was like, maybe that could be a product idea, but you can totally build it with two things from Amazon for 50 bucks, really solved.

But I still think there's definitely room for product ideas that you can build with two products from Amazon for 50 bucks. Because that's friction, and you're eliminating. Friction is a whole business in and of itself. You're making it easy. And you can even make that the angle. Right. Like, you can make that the selling point. Whereas there could be something else that does that exact thing. But their angle is an alarm clock. Right. That's their unique value proposition. Your angle is you're more of. You're a better space heater that also has an alarm clock. That makes sense. You're just framing it differently.

Yeah, that does.

Yeah.

And I guess I couldn't buy it.

Yeah.

One of the things I thought would be interesting to talk to you about is a lot of people that are in my position, they're looking at it from this angle where they're like, oh, what's the technology? I could invent, and then I could patent, and then I could license the intellectual property. But I think today the kind of, like, threshold of effort that it takes to get into E commerce is so much lower that there's probably a whole field of things that are not really protectable from an IP side, but you could still move a couple hundred thousand units before all the imitators catch up. And this. That's interesting thought that you had, because I discarded that idea because I think it would be difficult for me to beat the bomb cost of those two parts. But maybe I could just put a enclosure around, like, the two highly rated things from Amazon or something, and mark it up.

Yeah. Look at it this way. I wanted a light in my bedroom, like a programmable light that I could. In our bedroom, we have four recessed lights, and I wanted the one right above my side of the bed to be able to turn on and off with my phone so my wife could sleep. And so my point is, I went and bought there's hundreds of these on Amazon and I bought one and it has to come with a hub. So you had to plug the hub in on the wall over there and then you plug the light in. And so that's a little friction, a little janky. But I know that the technology requires it. What is preventing you from finding a box manufacturer that can make a different box that frames it differently and has your brand and your name on it? And then just getting a plug and a space heater and, and then getting instructions printed up and saying here's how you do it. You plug this into the wall and then you plug the space heater into this and it's, you're just piggybacking off two products that probably hundreds of companies in China make. Both of them get the ones that are the most generic looking, don't have any brands or logos on them, have them go in the same box, take a flyer on a container full of them and see if you can move them.

Okay, so this is really interesting. I, I guess like the short answer is nothing, right? Like I could just go first, go do that. So some of these ideas, if you need to like inventory $5,000 worth of parts that's like that I could handle that. It would hurt a little bit if it all went nowhere. It just, I guess not really. I'd have to figure out what to do with all of them. So it's like stuff like that. I'm, I don't have the china, the like china manufacturer connections yet. I haven't done, I don't know like third party logistics or first party logistics. Like what it say it sounds like you'd lean towards with this one if we did. If I did try this idea, just buy all the stuff, put it in a closet at my house and then go around and try and sell it around town basically.

So if I were you, I was trying to think of this as you were talking. I would not take a flyer in a container because that's going to be way too much money. So forget I ever said that. I would just go to Alibaba.com and just start DMing manufacturers of these two different products and get them to send you samples. First of all, they'll usually do that for free. So you're at $00. Find a space heater and a plug like it's just a smart plug, right, that you like and get a dozen of them. Most of them will probably be free. Find two that you like. Then find someone in the US that makes custom boxes. They'll probably be one to two dollars apiece. Get the minimum order quantity of those printed. Call it 100 or 2. So you're out a few hundred bucks now. And then order the same quantity of each, the plug and the space heater. And then just print up some simple instructions. Assemble them in your house, store them in your closet and then go to Amazon and find, find out what it takes to ship them. Minimum quantity of items. And they're going to want you to label it specifically. It's kind of friction. It's a lot of headache. But once you do it, once you can roll any product into that same account and then you label them correctly, you ship them off to their distribution centers and see what happens. And it's obviously you've got some time because people aren't going to be buying space heaters right now. So that buys you six months to really to nail the timing on when people are actually shopping for these things. Things. And in the meantime, list them on Facebook Marketplace. List them on Craigslist. People will be looking for used space heaters. So they'll find your. Just by nature of the search term, they'll find your new space heaters on Facebook Marketplace. You can do that at any time. Like you could list that right now and see if there's demand for it. And then it's just like the Facebook Marketplace isn't really going to be scalable because it's mostly local. Unless you. It could be if you do paid and, and you boost it and you ship. But I wouldn't. You're using Facebook Marketplace to get some feedback on the idea and on the product. And then I think it would also behoove you to make a video that you could plant with an influencer of some sort. Just like a 20 to 30 second video of just showing how it works. And I'm picturing you could even like you watch the Office. Yeah. So it's like that episode where Michael Scott puts the George Foreman grill by his bed because he wants to wake up to smell of bacon. And you could superimpose that in the video somehow. And it's like that except for a space heater. And I think that would do really well on social media. But you'll need to find someone that already has a presence and just say, hey, can we take a flyer on this video?

Fair use, right?

Yeah, I don't know. I don't know. But better to ask. Better ask forgiveness and permission, but nice. And then find one person with 50, 100, 200,000 followers and just say, hey, I'll give you 10 bucks from everyone you sell. Most people will ignore you. Someone will say yes and see if you can use the social media angle as well. Because I do know a lot of people that have sent a random product to Amazon and just made a ton of money. There are also survivorship bias and people that have never sold one. You just don't know.

Totally.

And have you ever looked at Jungle Scout?

No, I've never heard of Jungle Scout.

Check out Jungle Scout. It'll enable you to do a ton of research on competing products and they will tell you with reasonable accuracy how many of those products that. That every company. It's really cool.

I was literally like just wondering how to get this data. It's just basically like sales data for Amazon products.

Yeah, yeah.

I was just. I was like on Amazon and I was just like. I was like, I guess they probably don't want us. Like.

Yeah. I don't know how Jungle Scout figures it out, but they do.

That is dope. That is really cool.

Yeah.

I love these suggestions. What do you think about combining Amazon listing with social media? So if we.

If.

Because the, the Amazon seller like approach is nice because it's very hands off. So I just have to get my. Whatever their minimum quantity is, ship it off a couple times to get a couple distribution centers and then. And then I don't have to keep them in my house or mail it myself or whatever. So that's really appealing. But. And then it. I would think that I could still do a micro influencer campaign and then just have people link to my Amazon page. And then additionally, I think people are pretty comfortable with Shopify websites now. As long as that's like the payment layer and everything. But Amazon's another way to make people feel comfortable giving their payment information. And I know, at least for me, I have a bias towards things that show up on Amazon. It feels like it. I feel like I can trust the logistics more.

You're correct. But forget trust for a minute because what makes Shopify such a behemoth is the fact that you can really push paid Facebook ads to these websites. And we'll talk about Shopify for a second. I would go to Upwork, find someone that can make a one product Shopify site and they have one product Shopify themes too. Because it's very different to sell one specific product as opposed to just having a Shopify store that sells even two to 2,000 products. And it's a different look, it's a different feel. You want like countdown timers, you need some apps widgets. So find someone. Don't reinvent the wheel. Pay someone 4 or 500 bucks that can make a one page Shopify site that's optimized for split specifically for Facebook ads. And then use an app a Shopify app that can a b test your price points. Not enough people do this. They're like it's not really a clean.

I love AP testing.

Yes.

Yeah. I yeah. Already sold.

Here's the thing. If you're selling a 30 to $50 product it's going to be almost impossible to really scale with Facebook ads because your cost per acquisition is going to be about the same. And so I would try testing just stupid price points. $30, $80, $150 and the same ads, the same copy to different price points on the same landing page and it will just split your traffic and then see how that does. I wouldn't count on Shopify. This can sell well. Like there's so many not to offend your product dumb items out there that.

People I threw this one out because it's a dumb one. Yeah there's this one can go on the air.

Oh there are things like a little cutter that like you take a pie and it's like a better pie slicer and how often does anyone eat pie? They make tens of millions of dollars because people are stupid and they buy stupid things. Right. And it goes viral on TikTok or Instagram. So this is actually a utility like we need to stay warm in the winter. It's better than just a normal space heater.

I think you could just right to have it kick on only that's true. Be awake. Yeah.

That's one of your selling points. Yeah yeah.

I gotta make I could check and see if I didn't check. Super hard to see if anybody was already selling this but you know it passed the five minute Google test. Probably not going to after the podcast.

Oh I don't know. No. I would do this though for real and let us know how it goes.

Okay, that's cool. And then so what do you think about the single product Shopify page versus try to come up with maybe three similar throwaway product ideas do them all at once. Jump up into this is like jumping into bigger scale. Do you think I'll that that it's most of the effort is getting one thing set up so that I understand the processes or do you think that like everything that I add is going to be a lot of extra complexity.

It just depends on what types of products it could be a Lot of extra complexity. But if you're in the same industry or if, if you're just importing space heaters for one idea and the other one you're like 3D printing a model and then you're finding molds in China that's they're almost two completely different things. So I lean just starting with this just to learn. And then ideas 2 through 3 will go so much quicker because you'll have learned so much. But if you have seven months until winter, then maybe do try two at the same time if they're not too complex. Okay. Yeah.

Right now my like prototyping lab is in storage because I'm like house hunting and we like move states and stuff and so it's a better time for me to try this like fully external type thing. Import a space heater, import a timer, find a company that will do a casing for it.

So.

Or actually do you know any places to look for US manufacturers that are interested in these types of things that. What I was googling before is I was. I found a few companies are looking for injection molding with direct shipment. But injection molding is more high run. It's expensive. Did you have. You were thinking maybe of some 3D printing companies or something?

Yeah. Have you looked at Thomas Net?

No, I haven't. I've heard of it though.

Yeah, I would check them out. There's. That's a great resource for all kinds of stuff like this.

Okay. Yeah. That's awesome.

Yeah, yeah, yeah.

This has been super interesting. Yeah. And really fun. Yeah, it's. I. I've listened to every episode of your podcast so far.

Thank you. This was funny out. Yeah.

I've been like imagining this conversation for a couple episodes, so.

Well, hopefully I didn't let you down.

No, not at all.

Not at all.

This was really fun.

Cool. Best of luck, Clayton, and follow up, please. That's all I ask is that you follow up and let us know how it's going to.

Yeah, I will do.

All right, man, have a good one.

You too.

See ya. All right, that is it for today's episode of the Kerner Office. I had a ton of fun. This is one of my favorites. We didn't have as many callers, but I think everyone was really good and insightful. So I hope you enjoyed. Please like and subscribe. Share with your friends. Yada, yada, yada. Love you all. Bye.