Aus Dropshipping eine echte Marke machen

0:00Unternehmer/Gast We sell direct response e-commerce products, all paid media. Uh we do about $3 million a year in revenue. So >> Direct response >> e-commerce products. >> Okay. Like drop shipping stuff? >> Pretty much, yeah. It's It's more branded than that, but essentially yes. >> Yeah. So, you have customers who are doing that or you doing that? >> We're doing that. >> Okay, got it. And so, you have a handful How many SKUs do you have? >> Uh like four. >> Okay. Is it all the same brand? >> No.

0:26>> Okay. >> Yep. So, we have uh we're doing It's like 4 months old. So, we're doing a run rate of like uh 3 million a year. Um we have, you know, background in like paid traffic affiliate. Um so, it's not the first rodeo with that. We're trying to get to like 15 million a year run rate. >> All right. >> Um what's stopping us right now, you know, not entirely sure, but um basically like we have each step for everything that has to be done. We built out teams and systems for the main priorities, and those things are working pretty well. I'm happy with uh our talent and what they're producing. Uh but so far, what I'm experiencing is that, you know, I'm left with this, you know, list of like random chores that somehow only I can do.

1:07>> The junk drawer, yeah. >> But I'm not sure how to approach hiring for this cuz it ends up being like a very niche specific task, but I may I might only need them for like, you know, 20 minutes a week or something. So, it ends up being me, but with a million things, you know. >> And you're founder? >> Uh yeah, co-founder. >> Okay. Um So, let's start here.

1:32You want to get to 15 million. What stops you from spending more money? >> Uh nothing right now. I mean, so we just hired a a pretty robust funnel team and an operations guy and like a strategist. So, kind of just waiting on those things to kick in, really. >> Okay. >> Um but I'm I'm fairly confident that we we should be able to at least do another 2x from here. >> Okay. So, this is more a complaint than a constraint. Right?

2:03>> Okay. No, I'm just being No, I'm This is me asking for clarity. >> So, we think we can double if we just spend more money. I'm not spending more money because I'm waiting for this thing to happen. Once this thing happens, then I'm going to spend as much money as I can. >> Sure. >> Right? Um and in the meantime, I have stuff I don't feel like doing. >> Okay. >> No, I'm I'm like this is me trying to translate back. Is that true? Is that like accurate? >> Yeah, but eventually there's going to be enough of that stuff that like I will have to find some way to hire out for these things.

2:32>> Yeah, and then there'll be more stuff that you'll still do. You'll just do the more important valuable stuff and give the other stuff to somebody else. >> Yeah, but a lot of it ends up being fairly tedious. Like it's it doesn't feel like high leverage or high value at all. >> this is where like VAs and product project work can come really in handy. >> Yeah. >> Like I'll give you an example. So, when we made all the ads for the launch, right? I don't I didn't need the amount of editors that I had to spin up in order to cuz like I'm not going to be making 300 ads a week, you know, ongoing. I don't need to. But for the launch, I did and I wasn't going to hire an extra 15 editors full-time cuz it's just like I don't need that. And so, we spun up 15 editors that were contractors who would then just clip and we had one person just did QA on it to make sure that it was good and then we'd ship them.

3:21Right? And so, if we have something that's like one-timeish work where it's sporadic, then I'm fine just having a sweet or a bench of contractors that I can turn on and off >> Sure. >> as long as they do decent work. >> We do similar things like with our with our video editors as well, but you know, some of the tasks are fairly specialized. Like you need some >> I was just using it as an example for editors, but I'm saying like if you have tedious work like this is where the Fivers of the world like can come in handy.

3:47Alex >> Yeah. >> And worst case, you train a contractor or VA on how to do it and then they do it. >> Yeah. Just like someone that's high-level enough in like Shopify work, but we only use them for a few hours. >> There's tons of Shopify contractors, like a boatload of them. And they're not that expensive, and some of them really good. Yeah, I like I would just look at my list, what are the things I'm doing on a regular basis? Can I ship out most of these to a contractor to do a piecemeal? Probably. And now you're trading 20 hours for two, and that's just you just keep making that trade until eventually you've managing a ton of people, and then it's like, "Great, one person is managing all of these." And you just trade all that time for you getting more, because hopefully if you're doing that much work, then you should have the revenue to support um that role.

4:26Have you Have you scaled e-commerce like this before? >> Yeah. >> Okay. Are you Are you just running paid ads? >> Uh yes. >> Okay. Do you have influencers who are doing stuff? >> No influencers. We're looking to hire for that, but we We have three or four channels for paid at least. >> Yeah.

4:53Alex I'll say this, how big do you want this to be? >> Uh I mean, ultimately like the goal is we'd like to have a portfolio of call it four or five brands that we can then exit in a couple years. >> So, I have this conversation every week um with somebody who's doing e-commerce. And it's almost always the same, like, "I would like to have a portfolio of a handful of products that I could eventually sell someday."

5:18I have really yet to see anyone do that. Um and it's I think for two reasons. One is that as you continue to scale, your CAC will continue to go up, and your gross margins will shrink. And that will get frustrating. You will then also have supply chain issues, which would become a burden. You also have dupes, if you start becoming really good, that will undercut you in price and list on Amazon and all that stuff. Um do you have patent protection like for any of these products?

5:46And so, like, you right now run a media arbitrage business and it works really well up to about 10 million. >> Okay. >> And then it will quickly stop working very well. Um and so I think to your point of like that you can see a double, that's probably true. You might even triple that's sitting there with a little bit of optimization, more email follow-up, blah blah blah blah blah. Um but you'll you'll probably get close to capping in that neighborhood, 10 maybe 12. Um and then you're going to be like, "Well, we're doing a million dollars a month but we have like almost no margin and our cash flow's fucked."

6:15Um and so the what I think you want is that you want to build a brand that has a product that you really believe in that will allow you to recruit affiliates to your cause. When I say affiliates, I mean influencers, not traditional direct response uh affiliates that are just mercenaries, but like people who actually believe in it. Um and when you do that, you will actually be able to build a brand because fundamentally like any one of the products can be big enough on their own to sell. And so rather than saying like, "Why don't we try and build four totally different products and totally different brands at the same time?" It's like, "Why don't we just try to build one that we really like that we think has a chance at actually like really helping people for whatever the problem that the product solves?" Um that's what will build what I think you want.

7:05It's just that most people come from the direct response world just are pure performance marketers and I say this being someone who comes from that world. >> [snorts] >> And I had to learn the hard way that you will run into the wall that there's a there's a great article you can recall the direct response doom loop, which you might have read. But basically, you just do this. Revenue goes up, margins compress, margins compress until you're eventually here and then you have to keep selling in order to maintain your team and then you just run a very large, very high high liability nonprofit. And it sucks.

7:33Alex And cash flow is a huge constraint and you've got all the supply chain and then you're like, "This sucks." And then you'd have another conversation, come back here and be like, "Hey, we're doing 12 million with 7% margins." And I would say, "Okay, of the four products you have, which one is the the one that's the the clear winner? That's the one that's carrying all the other losers." And you'd be like, "Well, it's this one." And then I'd say, "Okay, cool. Why don't we just get rid of these three, and then put all of your effort on this? Do you think you'd be able to win that way?" You'd be like, "Oh my god, for sure." And be like, "Great. So, like, why don't we do that, and then actually invest in building the brand >> Yeah.

8:00>> around it?" >> We we definitely have uh you know, we're we're paid traffic affiliates. So, like, >> Yeah. >> we're data people. Like, uh >> Yeah. >> But so, one of the things that I've thought about is like, you know, our our biggest skew it it's good, but it's not like it's not that good. Like, I know a good campaign when I see it. So, like, part of the purpose of building out like uh you know, our research and funnel teams is like, well, eventually we're going to find something where the market is just like 10 times better. You know, so it's like, do we keep chugging along with like the one that's like a six out of 10, or do we find go find the nine, and then go all-in on that?

8:37>> The skill set that you guys are deficient in is going to be brand. >> Mhm. >> And that's what you have to learn how to do. And the brand is also completed with the product. >> Right. >> So, like, that's what completes the brand loop. Like, we make this amazing promise, we have all these great associations, people then make the purchase, and then the product either reinforces the brand or destroys the brand. And if it reinforces the brand, then the loop continues and becomes a virtuous cycle. And that's how you go from an e-commerce store that does media arbitrage into a household name that you can sell for not just 50 million, but maybe 500 million.

9:10Alex And so, it's just that like, I have this conversation literally every week. And so, I know that you're coming at this from a math perspective. It's just that it will not work at scale. And so, I would rather you spend as little as you can on all of these different things to find a product that you guys really think is legit and has some level of defensibility, if you can. Because if you don't have a defensible product, the only thing that you have is the brand to differentiate you.

9:39>> Yeah. >> That's the only differentiator. And so, if you're competing because like just played out the next step, right? Like let's say you find your nine out of 10. No one's buying that. Like private equity investor, not buying it because they know the game. They buy brands. They don't buy products. And so, you get your nine out of 10 and then the dupes flood because they see that you're killing it and then they undercut you on all this stuff and then your ROI goes down and then you leak everything to your competitors. So, either you have some sort of patent that you can actually protect and you have a legal team that can enforce it or you build a brand.

10:11So, like that's the long-term play. The rest of this is just making money until you figure that out. I'm being super real with you. I just rather save you a couple years. But like that is where this leads. >> Okay. I mean, so >> How do you build a brand? >> Yeah, right. >> [laughter] >> Yeah, how do I how do I do that? But um, you know, we are working on like the legal defensibility of it. You know, I I didn't I didn't mean to say like

10:36Alex >> lead with brand rather than legal. I would lead with brand rather than legal. >> Yeah. >> Because legal you have to like it's still tough to like it's better to be big and then win with legal than try and be small and win with legal because you'll just get drowned in fees and it's it's it's better to just have the coolest brand and have the coolest people promoting the thing and then people just want to buy from you even though they see the cheaper knockoffs. >> Got it.

11:02>> But that's like that's what you have to do if you really want to go where you want to go. Otherwise, you're just going to be cycling through SKUs and you're going to say you have a portfolio and it'll sound impressive to people who don't know what you're talking about. But like margins will do this, cash flow will get and you have co-founders and it'll be like, "This is so much work. This sucks. >> [laughter] >> I wish we'd just had one product that we all really believed in that we could like build a business around." >> Yeah. >> And that's what you want to do. >> Cool. Thank you.

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