Why Media Arbitrage Isn't a Sellable Brand — Transcript

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1. 0:00I started a wellness e-commerce brand 9
2. 0:02years ago.
3. 0:03>> Okay.
4. 0:04>> We scaled to like 5 to 10 million in
5. 0:07annual revenue
6. 0:08>> and basically our our profit is
7. 0:12>> and [laughter]
8. 0:14>> you delivered that. Great. Yeah.
9. 0:16>> We we scaled mainly with meta ads
10. 0:19>> and uh this past year we like had to
11. 0:22stop paying ourselves to like start
12. 0:24recur like paying back some debt in the
13. 0:26company. And then in the meantime, I'm
14. 0:29helping my brother scale his e-commerce
15. 0:313PL.
16. 0:32>> It's doing way better.
17. 0:33>> Way better.
18. 0:34>> Of course.
19. 0:35>> High volume, high ticket, sticky,
20. 0:38>> high profit, beautiful business.
21. 0:39>> What are we doing? Yeah.
22. 0:40>> Yeah.
23. 0:41>> Um,
24. 0:42>> we should totally do that.
25. 0:44>> I I feel you. We're open to exiting the
26. 0:46ecom business. Um, we're worried that
27. 0:49because it's low profit and it's very
28. 0:51IBIDA based
29. 0:52>> acquisition. Won't be able to sell it.
30. 0:54>> Won't be able Okay. Okay. So
31. 0:56>> you have a media arbitrage business and
32. 0:58you no longer have the arbitrage.
33. 1:00>> The only thing that people buy in
34. 1:01e-commerce is brands and right now it
35. 1:03doesn't sound like you have a brand,
36. 1:05>> right? I mean, you just had ads. You
37. 1:07picked products that worked well in that
38. 1:09space. You ran ads around them using UGC
39. 1:11or whatever else. And that's I'm
40. 1:13guessing how you made most the money.
41. 1:16>> Yeah. Yes. But it's our own like
42. 1:18products that we created. We made like
43. 1:20wellness journals,
44. 1:21>> whatever. Yeah. Yeah. But like there's
45. 1:22no like you have no big brand
46. 1:24spokesperson. And there's no like
47. 1:25collaborations you've done with anybody
48. 1:27who's named brand. It's just you ran ads
49. 1:29and people bought it, right?
50. 1:30>> Correct.
51. 1:31>> Yeah. Um
52. 1:34I think so.
53. 1:36>> Can I reframe what's happened at this
54. 1:38point so you feel better about it?
55. 1:40>> I I feel okay. I know I've learned like
56. 1:43I became head of sales of the 3PL. I'm
57. 1:46crushing it with 3X. Like you know
58. 1:48>> what guilt do you have about shutting
59. 1:49this down? Um,
60. 1:53honestly, we're looking
61. 1:54>> Thank you. You could tell. Could you
62. 1:56Could you could feel it? Yeah. Can I Can
63. 1:58you give me a cold one?
64. 2:00>> One of my one of my I have like three
65. 2:01pet peeves. Slow Wi-Fi, warm drinks is
66. 2:04one of them. Go ahead.
67. 2:05>> Um,
68. 2:06>> like why bother?
69. 2:07>> I'll wait till there's a cold one. Yeah,
70. 2:09go for I feel like I'm going to be
71. 2:10handing you an axe with this next like
72. 2:12two sentences, but we're trying to save
73. 2:15the ecom company by changing our model,
74. 2:18by making it a subscription monthtomonth
75. 2:21and doing upsells.
76. 2:22>> You don't have a brand.
77. 2:23>> Okay.
78. 2:24>> The only thing that's sellable on
79. 2:25e-commerce is going to be a brand. No
80. 2:27one buys media arbitrage. E
81. 2:30>> so even if it becomes a lifestyle
82. 2:32business, like you still
83. 2:36>> What do you want to have happen? I want
84. 2:37to make a lot of money.
85. 2:39>> Okay. Do you have So So then So then the
86. 2:41question is just what equity do you have
87. 2:42in the 3PL thing?
88. 2:43>> Um it's it's my brother's. He's
89. 2:46generous. We haven't ironed it out, but
90. 2:48I have good faith that, you know, if we
91. 2:50add a lot of value, it'll be meaty.
92. 2:53>> Well, I would say like just make that
93. 2:54your first priority. Like actually just
94. 2:56get that written down.
95. 2:57>> Get a lawyer guy to come in and just,
96. 2:59you know, mediate it or whatever. Get
97. 3:00get that in paper. And once that's done,
98. 3:02it's like you have a significant and I
99. 3:04don't normally say this, but like this
100. 3:05thing doesn't have value. This thing
101. 3:06does. and you're doing great. So to me,
102. 3:08I'm like, yeah, use this to learn all
103. 3:10the skills you have. And the thing is is
104. 3:12that that you learned all these
105. 3:14marketing and sales skills, which is
106. 3:15super valuable, but the thing that was
107. 3:16even more valuable is you understand all
108. 3:17the pain of being
109. 3:19>> it on these calls, right? [laughter] I'm
110. 3:21like, let me tell you my life story,
111. 3:23right? How do you think I could make
112. 3:24this content? I've suffered
113. 3:27>> and so yeah, so I I do think it's the
114. 3:29right move for you. So you have my full
115. 3:30green light on I think you jump ship. I
116. 3:32think you're there. I think you just
117. 3:34wind this down. The nice thing with that
118. 3:35business is that you'll have a handful
119. 3:36of VAS that you got to get rid of and
120. 3:38probably two or three key employees. You
121. 3:39can say see if any of them want to come
122. 3:41to the 3PL side, which is I'll say one
123. 3:43of the nice the only silver linings of
124. 3:45shutting a business down is that there's
125. 3:47usually like two or three really good
126. 3:49people and the rest of them not so much.
127. 3:51And then you just get to stack the new
128. 3:53company with like the entire soul of
129. 3:55what created value in the other company
130. 3:57into the new one and just propels the
131. 3:58next one more.
132. 3:59>> Yeah. I I work with my wife. She like
133. 4:01helped like we're we're going to grow.
134. 4:03So, can I ask you then why
135. 4:05>> that was the hard question?
136. 4:06>> I mean, not really. I guess the harder
137. 4:09question was, should I spend more time
138. 4:11trying to revive it and fix it so we can
139. 4:12get a better acquisition?
140. 4:14>> No, I don't think you're going to get an
141. 4:15acquisition.
142. 4:15>> Okay. Um
143. 4:17>> I think you will waste tons of time and
144. 4:18effort when you could like take that
145. 4:20same effort
146. 4:20>> and just
147. 4:21>> and Yeah. and crush it. Thank you.
148. 4:22>> Okay. Thanks for the candidness. Um, so
149. 4:25I have a question in regards to scaling
150. 4:27the 3PL. So I kind of came in more
151. 4:31remotely whereas my brother's the one in
152. 4:33the actual warehouse doing the
153. 4:34operations and I'm working more on the
154. 4:37sales end. Um so
155. 4:41I'm I'm basically I broke that business
156. 4:43because we grew it so much that ops
157. 4:45can't keep up and I understand now we're
158. 4:47going to go and run through that fix
159. 4:49constraints one by one. At the same
160. 4:51time, I have a couple ways to add
161. 4:54additional profit for the business like
162. 4:56create new money models from the
163. 4:58existing customers there.
164. 4:59>> Let me ask you this. Will those levers
165. 5:02exist in a year?
166. 5:03>> Yes.
167. 5:04>> Then don't worry about it.
168. 5:06>> Okay.
169. 5:06>> Like just because you can pull a lever
170. 5:08doesn't mean you should. And right now
171. 5:09you're already at the brink of breaking
172. 5:10the business. Yeah. You only pull lever
173. 5:12like have urgency around a lever if it's
174. 5:15going to be something that's going to
175. 5:16disappear. the vast majority of
176. 5:18monetization
177. 5:20um levers that are available in most
178. 5:21businesses only get better with time,
179. 5:23not worse. So,
180. 5:25>> unless you're in some rush to prove
181. 5:27profitability for an exit, which you're
182. 5:29not.
183. 5:30>> No.
184. 5:30>> And the best time to do it is when
185. 5:32you're in a sales process. So, like save
186. 5:33that thing, juice it six months before
187. 5:35the sale. They're going to see it
188. 5:37skyrocketing. They're going to catch it
189. 5:38before it gets too big.
190. 5:40>> Okay. So, I think that'll mean I should
191. 5:43start going into the warehouse working
192. 5:44on actual ops, which I'm very down for,
193. 5:46but it's just a total
194. 5:47>> or hire someone
195. 5:48>> or hire someone
196. 5:49>> who's already done it.
197. 5:50>> Yeah, it's been fully bootstrapped and
198. 5:52we've just teetered into like
199. 5:54>> profitable.
200. 5:54>> Yeah, like very profitable. Yeah. And
201. 5:57and scaling. So,
202. 5:58>> so jump in for a little bit, but I think
203. 5:59as quickly as you can get back to the
204. 6:01rain making
205. 6:01>> and then go back to further scaling and
206. 6:05Okay,
207. 6:06>> cool.
208. 6:07>> Easy peasy.
209. 6:08>> All right. Thank you.
210. 6:08>> Yeah, you bet, man. Thank you.
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