#26: How A Father-Son Team Built & Sold A 7-Figure eCommerce Business

Welcome to The Growth Booth, episode number 26. Today, I've been excited about this one for some time because we're going to get to hear a story about a father and son team who went from knowing basically nothing about online marketing to building a very lucrative e-commerce business and then selling it for multiple millions of dollars. 

I've been able to be a fly on the wall throughout because I met these guys when they came into our Blueprint Academy Mastermind back in 2016. I think that journey has been an inspiration. I hope if you're listening to this today, you'll be able to be inspired by what's possible when you're building an online business when you're building an e-commerce business. I think it's really important that you know that this is not a pipe dream. This is something that regular people can do and do all the time. 

AIDAN

With that said, Rick, Mike, thank you so much for taking some time out of your day here to be here today. Thank you, guys.  

MIKE

My pleasure. Thanks, Aidan.

AIDAN

Before we dive into some of the details, why don't you share a little bit about the business model that you were using here? 

MIKE

This business was based on the Amazon white-label, finding products that we could manufacture with some partners in China import and then sell mainly through the Amazon platform. 

AIDAN

It's private label. It's creating your own brand of products. Is that right?

MIKE

That's right. Yeah. Created our own brand and just started from scratch and went from there.

AIDAN

And we met in 2016. In fact, we went to China together. I think it was that same year, wasn't it? Was that 2016?

MIKE

Yeah, it was.

AIDAN

And we went to the Canton Fair. And by the way, that is the most amazing product fair that I can imagine. I can't remember how big that thing is. But you can walk all day.

It's huge. You don't make a dent in it, walking all day. Is that where you found your product or did you find it? How did you find the products that you were selling?

MIKE

No, actually, we ended up in the automotive niche, which was, I think, the week before we were there. But while we were at that Canton Fair, I mean, we considered every niche, every opportunity. We're looking at gardening stuff and pet stuff. I mean, there are so many random, like you said, we couldn't even see everything as it was just so huge. Just walked miles, it felt like. But no, we met a lot of great people there. Actually, we did meet one of our shipping agents that we ended up using. She was standing out in the hallway handing out business cards, and we used her for a few shipments. But our main supplier, we found just using Alibaba.com.

AIDAN

Yeah. And if we go back a little bit before that, what were you doing pre-2016? You started in 2016. What are you guys doing prior to that? Were you working a day job? Did you have another business? 

MIKE

Yeah, it depends on how far back you want to go. My dad, was always in my whole life doing entrepreneurial different businesses. He and I both studied accounting in college. Both worked for one of the big public accounting firms. While I was working at one of those accounting firms and just hating it, he kind of approached me with the opportunity to do some real estate investing, and excited for an out from public accounting and the prospect of working with my dad and doing the entrepreneurial route, I took it and we flipped houses for, I don't know, how long was it?

RICK

About six years. About five or six years. We started, I think, 2010 and did it right up until 2016 when we launched this and we did our last couple of flips about that time.

AIDAN

It sounds like you both have especially you, Rick. I mean, you had the entrepreneurial background, and I guess, Mike, you picked some of that up from your dad. 

MIKE

Yeah.

AIDAN

Do you think that really helped you in getting going? I mean, a lot of people, I find, have almost a mind like a psychological block, and they don't get going, but it sounds like you would have been maybe used to different types of diversity and being an entrepreneur.

RICK

No question about it. One thing about an accounting background is, to run a business successfully, you've got to understand numbers or have somebody who understands numbers, knows how to evaluate and do financial statements and understands costs and projections. We both have that background, which gave us just a great comfort zone for doing our own businesses. Like Mike said, I've done several bought and sold several businesses before we got together and been through the ups and downs that comes with business ownership that we all go through. You can see how you just solve problems and take it day by day, and you don't get too high and you don't get too low, and you just try to keep a trajectory going forward.

AIDAN

One thing I noticed with you guys, especially in the early days, 2016, 2017, is that you always sort of showed up. I mean that both figuratively and literally because we were doing our Blueprint Academy Mastermind meetings and you guys would always be there. It doesn't matter where it was. In fact, China was part of that. You went to China. You showed up in different places all around the world and across the United States. Regardless of where you were in the journey, you were always showing up, you were present, you were ready. 

I think little by little, things just started to fall into place. I would like to dive in a little bit more into how the business sort of started out. You mentioned that you sort of identified automotive as a potential niche. Did you find one or two particular products? How did things unfold for you? 

MIKE

Yeah, good question. It unfolded through hours of just clicking on links on Amazon, different categories. There are so many subcategories and best sellers and just hours of making lists of potential products and then going through the processes that you taught us to kind of analyze, “Is this going to be a good opportunity or not?” We didn't necessarily decide, “Let's go automotive.” We found one product that was a good opportunity, that was on a list of probably 20 or more, I don't know. As we reviewed those oftentimes together with you at times, that was one that just sort of stuck out and it was super random… 

AIDAN

…and ticked all the boxes.

You said that you found as you started with a list of 20 or more products and you were sort of filtering them, seeing which ones ticked all the boxes, and this one just kept standing out there for you. 

MIKE

Yeah, exactly. And we sort of ended up with a really short list at the end of maybe three or four products and decided to just start moving down the road a little bit with each one, try and find suppliers, get samples. This was the one that just you sort of go until you can't go anymore. And this one just kept going. That was our first product. We were really blessed. I mean, it just kept going and going and far exceeded our expectations. It ended up being a great first product, which established sort of a brand and then a niche that we could build off of. 

AIDAN

And you ultimately had other products under that same… 

MIKE

Yeah. Then over the next four or five years, we slowly added more and more products that made sense. We were pretty careful that we didn't just throw a ton of products out there. Our first product was going so well. We were careful. We didn't want to do anything that would potentially hurt it. We're really cautious, I think probably too cautious. If we could go back, we would have launched more products faster. But we were also just enjoying the business, too. By the time we sold, we had a portfolio of about nine products, four that were really great products, and then the others were more just part of the category or the catalog. 

RICK

We tried a lot of things. We launched a lot of different products early on and actually had three brands that we were trying to move forward and doing some manufacturing in India for one of them. And we really liked all three of our niches. We loved any of our brands, but just gradually things changed and the economics weren't there, and we dropped one brand and we dropped another one and then finally focused on our main brand where we built out the products. 

AIDAN

I was just going to ask, was there a specific sort of price point that most of your products were sort of circling around? 

RICK

Well, that's a good point. We tried some expensive products even within our brand. We tried a product that was $150 or something like that. 

MIKE

Yeah. I think we're trying to sell for like $220.

RICK

We found that the sweet spot just seemed to be around $35 to $45 dollars. We were very fortunate to have gross margins of 50% or better after shipping and handling and all costs for most of our time, which allowed us to really, through all the ups and downs, maintain really good profitability on those primary products.

AIDAN

I think you had a real good textbook approach there in that you did start off with a list of quite a large list of products, and then little by little, you weren't filtering them out, but you're always making sure that you were moving forward with products that did have a good margin and so on and so forth.

Like you’re saying, that's definitely a big tip here is to make sure that you do have that margin built in from the get-go, because that's not something that you can easily add in later. It needs to be in there. The products need to tick the boxes because you can't build that in later. It's very hard to grow your margin later because you're doing bigger volumes. There are raw costs that you can't dictate all of that much.

If we go back again, even to before your Amazon journey kicked off and before you were seeing those kinds of results, have you tried anything else in this online journey or was that sort of the first step that you've taken?

MIKE

Our intro into the online world, after we've been doing real estate for several years, we started looking for a business that we could buy just to supplement what we were already doing and ended up acquiring a portfolio of affiliate income websites that were in the coupon niche, printable coupons. We were excited about it. It's going to be amazing. We bought these sites and three months in, they just tanked. We quickly realized I didn't know as much as I thought I knew about the Internet and making money there. We thought it was going to be this easy. It was a pay-per-click income and affiliate. It was all automated. It was going to be awesome, and it quickly died. Ended up in lawsuits with sellers and everything like that. 

When they started going down, we started looking for help, people who actually knew online business. I can't remember how, but we just stumbled into your website, which was one of your, I can't remember what you call it, but it was one of your business models. I bought into that and I followed it and it was working. Then through that, saw an opportunity to join your Blueprint Academy. Since I’d had some success and felt like everything was working the way you said it would with that initial business model, we joined. That's when you kind of told us, “Look, your coupon sites are never coming back, but here's something you should invest your time in.” And wisely, you switched us over to the private label. 

AIDAN

It was quite an interesting thing that you did though. It sounds like you sort of tried to buy yourself an income stream, which was investing money. It's almost like buying digital real estate. You're buying something that's already making money. I guess the downside for you guys was that a few months later it was no longer making money.

RICK

It was a slow decline. It started going down in three months. It took a couple of years. 

AIDAN

What happened there?

RICK

We had a bad seller who did some things behind the scenes, unplugged some connections and things that dried up some traffic. 

AIDAN

Well, I guess the silver lining was that it led you to building out your Amazon business, which, as I said earlier, turned out to be a very lucrative business and something that you are able to sell for multiple millions of dollars. Maybe if that hadn't happened, you would have had a coupon site taking over and wouldn't have made a fraction of the money potentially. 

MIKE

That's right. 

AIDAN

Going back to the Amazon business, how did you guys divide up the workload? As like a father-son team? Whether you want some things that you did, Rick, others that you did, Mike, how did that work?

MIKE

Yeah. I mean, initially everyone's kind of excited. We kind of do everything together. But what we ended up working out was Rick would handle all the financials, sending wires, doing the accounting, doing the forecasting and the budgeting, inventory management. All the stuff that related to sending payments, monitoring the financials, that was Rick. 

Mine was more on the operations side: customer service, the PPC, advertising, maintaining our photos and our listings, finding products, everything that was on that side of the operations I took care of. 

AIDAN

I'll tell you what, I've always found it so much easier to work with a business partner and divide out the tasks like that. I think it also holds both of you accountable. I mean, you don't want to let each other down, whereas if you're doing it on your own, sometimes it's easy just to get lazy or cut corners. Obviously, you don't want to let your dad down, and Rick, you don't want to let your son down. What would a day in the life sort of look like for you guys back before you had sold the business, when you were running the business? 

Mike, you got four kids kicking around. How did you manage all of this and run this business at the same time? What did your day look like? 

MIKE

Yeah. I mean, the beautiful thing about the business, it kind of depended on where we were in the product life cycle. Because when we are launching a new product, it's like the hours would shift to working nights because we're in California, here in the United States. China is awake when we're asleep and vice versa, and so much of the product launch was working with them, so much back and forth on whether it was a package design and making sure that all looked right or making sure the product has the specs and the look and the function that we wanted. 

When we're launching products, it was a lot of working nights. Sometimes I'd be home, sometimes I'd be at the office. Once products are launched, everything is a lot more automated, and then it's more of a normal work day with actually a lot of flexibility, which is what I love because I take my kids to school, pick them up from school, take them to lunch. I could kind of come and go. Typical day, drop the kids off, get to work at about 8:30. I have my routine of things to do. I always jump right into work, and it's usually a pretty typical work day, work until four or five. 

AIDAN

What did you have? Do you just rent yourself an office of some kind? 

MIKE

Yes, we just rented an office. 

RICK

Three years we were in my house. Office is in my house. We only live about 12 miles apart, which normally would take about 15 minutes, but the traffic in Northern California got to where it was taking Mike in the morning during commute times, how long, Mike? 

MIKE

Yeah. It took me 45 minutes to go the 3 or 4 miles or whatever it was. 

RICK

After about three years, we found a little office where he could hang out, and then I just stayed working from my home. 

AIDAN

I think for me, even though I've got space to work from home and even though I've got an office in my own home, I find it so good to separate my home environment where I've got my family, I've got my two kids, to my work environment. I don't know if you found the same thing. You've got four kids. 

MIKE

I don't really have a place to work effectively here, like you saw just a second ago. They can't leave me alone if I'm here. It was nice. I have an office I could go to. Even during the pandemic when everybody's working home, all the kids were home from school, and all three of the four on Zoom class and computers, I had a place I could go and still be productive. Half the office, we built out all the shelving, and we use it for storing inventory. It was like a little office warehouse, if you will. It wasn't a warehouse at all. It's just an office.

AIDAN

Yeah, I love that. Do you guys have a team or is it just you two doing everything? 

MIKE

No, it was just us two doing everything. That's where we knew we should have hired 

people and we always talked about it and planned on it, but we never did. We hired, like a high school kid who came and sorted old inventory for me because I got so tired of doing that part. He was there for two months or something, just a few hours. 

AIDAN

The upside of that though is you didn't need to hire someone. I mean, you could have if you wanted to. There's a beauty in having that lean operation as well. I mean, you had higher margins, you didn't have any other partners. But from what it sounds like, so when you did eventually sell the business, I mean, it's a really good payday there. 

You just keep things simple. I think a lot of people go down the path of overcomplicating things, and they think that the way to grow fast is by hiring people, and they hire people too quickly, and then they end up becoming people managers. When they are managing people, they lose track of what they need to be doing in the day-to-day operations of the business. I think that actually there's a lot to like about keeping lean. 

The next question I have for you is just about Amazon Marketplace. I mean, you saw it evolve over six years or so of operating in there before you sold your brand. How confident would you feel about getting back in there right now and doing it all over again if you wanted to do that?

MIKE

Honestly, I feel a little less confident. It's changed quite a bit where I think the sellers on Amazon are much more sophisticated, products are much more established now.  There's still plenty of opportunities, I believe, and I fully plan on jumping in there and trying to do it again, but I recognize that the competition is much more sophisticated now. A lot of these big companies have acquired large numbers of brands, and they have teams of people managing every aspect of this. I think there's a place for  everybody still on Amazon, but it's a different, slower, more professional game, maybe. I don't know if that makes sense. 

AIDAN

I think it's matured for sure. I mean, if we're comparing it to 2016 when you got started, it's matured a lot. I think the pandemic has impacted things a lot. I mean, I know in the different niches that we are involved in, we saw a lot of the less mature, maybe like weaker competition, falling out. For once, this pendulum sort of swung, and that actually gave us a little bit of a boost for some of our products because instead of having a lot of people selling similar things, there was fewer competition. 

Then that's also offset by the competition that is there, becoming more sophisticated. I think if I were starting again, I would try to, just like we've always done, try to find a product that we could differentiate in some way and really double down on a niche versus just copying what someone else is doing. I don't know if you've got any thoughts around that. 

MIKE

Yeah, I think exactly what you're saying is true. You still see the new competition just kind of copy you exactly, try to create their space, and nobody's able to. You used to be able to do that, and you'd catch on and everybody had their piece. I feel like those pieces, they're much harder to grab now. I think you definitely have to be more thoughtful about whether your product is convincing people to buy you versus others. Also, I think the branding is huge. 

AIDAN

I always thought you guys did a great job with the naming of your brand and the positioning of it. A lot of people, I think, miss out on an opportunity by not thinking of a good brand. It's not like there's a special science or anything around it, but you want something that's catchy and sort of paints a picture of what you sort of stand for, and I think you guys did a good job there. 

MIKE

Yeah. Thank you. I think that paid dividends when we went to sell our company, because their comment many times was “With you guys, we feel like we're buying an actual brand, a brand that people are talking about in forums.” If you look at the millions of products when somebody searches on Amazon, we had a brand that we created strategically to cater to the US market because that's what our plan was and it was easy to pronounce. It was recognizable. 

AIDAN

To give you an example for people that are listening. Let's imagine you're selling superglue, and you could have Tom's Super Glue brand, or you could have something called Gorilla Grip, which is a well known superglue, I think, in the United States. That name, Gorilla Grip, captures the imagination, and you can visualize what that represents, whereas Tom's Superglue just sounds boring and it's not a name, probably that people are going to want to spend a lot of money on sort of acquiring at a later date. I think that's the real value there, it was a master stroke, the way that you sort of set that up. Certainly, in hindsight, you made a good decision around that brand name. 

MIKE

Yeah. Thank you.

RICK

Well, we brainstormed it, and then fortunately, it was a name that just meant strength. Then you could build the logo and everything around that. Mike was very talented, graphic-wise, to come up with the color schemes and the thing to make it so slick looking from the  packaging standpoint, which really attracted a lot of people. Everything about it really did. You mentioned other marketplaces and that you really designed it thinking about the US marketplace. Did you ever venture out into other marketplaces, UK or any of the EU at all?

MIKE

Yeah, we did. We launched on the Amazon, the European marketplaces. I think we could have had better success. I think the mistake we made was we launched, we let Amazon do all the translations and just take our US and put it on their Europe, and then we didn't really optimize from there. Our focus was always on the US. Without really doing anything, we were still positive-profit. It just wasn't that much. And then when Brexit happened and things got complicated, the profit just wasn't enough to justify that, investing so much effort to figure out what to do. We eventually stopped, but the opportunity was there, and I think we could have done pretty well. It was never going to be as big as what we were doing in the United States.

RICK

It became low hanging fruit for the people who bought us. They're going to be able to do that and take advantage of that. 

AIDAN

Yeah. I was going to say the one downside of having absolutely everything in the business optimized is it  doesn't leave much room for the person that buys the business to add some real value. That's the positive.

What we have typically seen over the years and working with lots of people is when people do add Amazon UK and Amazon Europe, when they start selling their product in those marketplaces, it can add another 30% to the bottom line. But it does require some management. It does require some optimization. It's not like you just throw 

it up there and you're done. You do sort of have to treat it the same way you treat your American Amazon.com sales as well.

As we wrap this up, I'm really keen to hear if you've got any nuggets of wisdom, any thoughts to share, maybe sort of any challenges that you had to sort of overcome. Any last thoughts for the audience here today? 

MIKE

I think the biggest advice I could give is to just do it. It's easy to overthink everything. You can always find enough roadblocks to talk yourself out of doing something. I think you want to be sure you have kind of a good process that you follow. But once you do, you have to be willing to risk some failure. 

I mean, we launched three brands. Two of them failed, and one of them caught on. We launched a handful of other products within this brand that failed. And a lot of times that's because we got away from our model for a minute, and that came back to us. 

I think if you just do and you keep doing in spite of some setbacks or some failures, something is going to land eventually. You've got to stay with it and you've got to be committed to doing it. Yeah. 

RICK

The only thing I would add to that would be that you can save a lot of time by having a mentor such as you and Steve. You gave us the blueprint. You taught us how to do it step by step, and we just took each step at a time methodically to do, and we just had faith that was going to work. We didn't know, but we just had faith that if we just worked a model that it would work.

Fortunately, our first two products that we launched were very successful, and particularly our first one. We started very small and just went from there. 

AIDAN

So much of it is about confidence, because if I was starting again tomorrow, I would know without any shadow of a doubt that I would be able to get something going. It wouldn't faze me if I failed ten times, because I would know that, yeah, I've done this before. I can do it again. But so often we see with people who are just starting down that journey, one or two failures can be absolutely demoralizing. Some people do, unfortunately, sort of give up before that magic happens. I think there's a lot to be said for just believing in the path and definitely working with a mentor can help.

By the way, if you do want to learn about our Blueprint Academy program, you can go to thegrowthbooth.com/academy, and that's where you can find out more information and get on the waiting list. 

Last question I have for you guys is what are you doing nowadays? Are you guys taking a sabbatical? Are you playing golf all day? What are you doing? You're traveling the world. What's the game plan now? 

MIKE

Yeah, I mean, a little bit of all that. I think initially I was feeling stressed about finding the next thing, whether it was buying a business or starting a new product.  I decided to just take a step, go home, and I've been home for the last two months finishing up all the house projects I never finished. We did go to Mexico and played some golf. He came here. We've been playing. We're just having fun right now. 

RICK

Yeah. And for me, it's full retirement now.  I love golf and I love traveling. I have a lot of different hobbies that I'm doing and enjoying. We'll see if I do something else, but I'm more from an investor standpoint now. Yeah. 

AIDAN

Well, I love it. I mean, your story is a real inspiration. I feel privileged to have been able to be a fly on the wall and watch and get to know you. I sort of feel even though it was your success, I feel somehow personally attached to it. To be able to be a part of that, I mean, that was really special. Going full circle from getting started to building something that was making money week in, week out, day in, day out, to then selling it and getting a really good payout, I think it's just amazing and an inspiration to everyone. 

Thank you so much for taking some time to share a little bit more about your story here today. I know that you will be an inspiration to many of our listeners. If you are listening to this and you want to learn more about how you can get started building your own business or even if you just want to get the show notes and a few links to other bits and pieces then head over to The Growth Booth, navigate your way to episode number 26, and you'll be able to download the show notes and you'll see other bits and pieces that you might find helpful as you start your online journey.

Mike, Rick, thank you so much once again. Real pleasure to have you on here today. 

MIKE

Thanks Adam. It's fun. Thanks. 

RICK

Thanks, and you've been a great friend and mentor along the way. We appreciate it.

AIDAN

Alright guys. That's a wrap. I will see you on the next episode of TheGrowthBooth.