Living The Red Life - Secrets to Selling 2 Billion $ In Ecom Products & Building an Ecom Empire w/ Tom Shipley

Episode Date: August 16, 2024

Tom Shipley is a seasoned entrepreneur and business strategist renowned for his expertise in e-commerce and brand management. With a career spanning several decades, Shipley has a proven track record of building and scaling successful companies. He started his entrepreneurial journey in the early 2000s and quickly made a name for himself by harnessing innovative marketing techniques and data-driven strategies.Shipley is best known for his role in transforming and leading iconic brands to new heights, focusing on strategic growth and operational excellence. His background includes extensive experience in financial management, team building, and navigating complex business environments. Shipley's insights into the ever-evolving landscape of digital commerce and his hands-on approach to leadership make him a valuable resource for understanding modern business practices.CHAPTERS1:14 - Introduction and Welcome2:45 - Tom Shipley’s Background and Early Career4:20 - Key Strategies for Business Success6:15 - The Role of Data in Driving Business Decisions8:10 - How to Build and Scale Iconic Brands10:05 - Financial Management and Overcoming Challenges12:00 - Innovation and Testing in E-commerce13:40 - Balancing Effective Offers with Brand Building15:30 - Advertising Strategies for Growth17:00 - Expanding Retail Presence and Strategies18:45 - Transitioning from Founder to CEO20:30 - Hiring and Team Building for Success22:00 - Mergers, Acquisitions, and Growth23:15 - Future Trends in E-commerce and Marketing24:30 - Final Thoughts and Key TakeawaysConnect with Tom Shipley:IG - tom__shipleyDEALCON LIVE - https://dealconlive.com - (Sep 23-25)Connect with Rudy Mawer:LinkedInInstagramFacebookTwitter

2 billion in sales, major companies, major exit. Talk about a couple of the fails and worst parts of your life. So here's what I'm going to say is, when you're on top of the mountain, the winds at your back and life is incredible and you can't do anything wrong. Be careful because not only you're going to hit a concrete wall, a concrete wall is going to fall on your head from the least likely situation. Life was great. And then our $500 million a year manufacturing partner, the only manufacturer in the world that had the license to produce our product. Bankrupt, watched on the door, no notices. Profit went from $600,000 a month

to $600,000 loss a month. And our bank told us they were pulling our line out. Rudy, what do you do when you run out of money? I mean, you either raise more or you sell more. Or you buy companies. Or you buy. We bought a $ million dollar company but you put our brand with great economics on top of that and a great offer and within three years we

did 100 million dollars in annual revenue wow rudy if i can give two pieces of advice to people is this um is first of all my name is rudy moore host of living the red life podcast and i'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. Guys, what's up? Welcome back to another episode of Living the Red Life. We have a special guest today, my friend Tom Shipley. He sold over $2 billion on the e-commerce side, a lot of health products, skincare products, clothing products, you name it.

He's been involved in some way, shape, or form, over 14 acquisitions and exits in his lifetime. And the most notable probably is a large exit from one of the leading women's hair regrowth brand back in 2021. He's been a friend for many years and an expert when it comes to growing e-com brands. So, Tom, welcome to the show. It's great to be here. Hi, Rudy. Good. So, look, $2 billion is a big number, but how did we get to the $2 billion?

Can you give a minute summary of who you are and how you got started on this for people that don't know you? Absolutely. And I didn't start off with the goal of $2 billion, and it didn't start off the first year of, boom, we did a $2 billion. Everything we do is, and basically is, the goal is, is build a great product and then understand what true leverage is. And it's always about priorities, about where we should put the next dollar. And this is what we did. And what I always believed in, and I always believe that is whoever can generate the most impression, the most profitably. And again, I didn't go out to generate impressions.

I went out to, and my partner and I went out to just to, it was focusing on an ROI and our ROI target and then using data analytics to really identify. But it's about building brand. It's about great brand. It's about great creative. It's about the emotional connection. Product has to be great, but it also has to be a big enough audience. So originally my first business is, and it was a big deal. And a lot of times we get stuck on these concepts and we get these limited beliefs. My first business, I didn't know how I was going to get to a million dollars in sales. My second business, which was my first catalog econ business,

I didn't know how to get to $10 million and we were able to get to $20 million, 10 million on my own, and then 10 million through an acquisition. The next business was, what I figured out how to do is how to build and what the process was for building iconic brands using direct response marketing. We were told in 2005, everyone knew this. It was conventional wisdom. You will never, ever, ever be able to build an iconic beauty brand, you're going to laugh at this already, using direct response marketing. Because it was either done through $100 million launch budget or PR and magic. And then it happened. And I thought that was the stupidest thing I ever heard. I said, you'll see what great offers, great marketing, and you need economists can do.

And my partner and I said, let's take on the beauty industry. And our first brand, this is kind of just pivots very quickly into it. Our first brand, Hydroxytone, I believed in it so much that my partner and I went in all in financially to our wife's degree. At the end of one year, we did, get ready for this, $331,000 of revenue, and we were financially tapped. Everything was gone. We had nothing left and couldn't get access to capital. Rudy, what do you do when you run out of money? I mean, you either raise more or you sell more. Or you buy a company. Or you buy company. Or you buy, yeah. We bought a $15 million company doing a million and a half EB, but I had a tech stack infrastructure. But you put our brand with great economics on top of that and a great offer.

And at that point, we were online and doing short-form radio. We put that on this and also print. We put that on this platform. print. We put that on this platform and within three years, we did $100 million in annual revenue. That first brand did a billion dollars. Again, it was our first skincare brand, Hydroxytel. We, as the bike, we learned how to ride on and what to do things right and wrong, but we always believed in omni-channel. Rudy, you probably found this is that every offer will eventually die. Every channel will eventually wear down. So always testing new channels, new offers, new creative and keeping on refresh is really what's key and focusing on the data. And that's what we did is

online short-form radio, which pivoted great for testing into short-form TV, eventually into infomercial print, and eventually these channels just wither down from us being top to small, but doesn't matter. And then Facebook, Snap, it doesn't matter. It's the same type of philosophy from Great Creative. What I love is, you know, obviously you named some channels there that half the listeners have probably never even considered, right? I think some of the younger listeners don't even know what radio advertising is enough to understand it and know it a little from my childhood but you know

like that that's why i wanted to interview you today and have you on is you know we spoke to people about building shopify stores and all that stuff but like you feel real brands that have gone on and doing hundreds of millions of dollars in sales and when i say real brands like i think there is a difference between having a cool unique offer a good shopify page and then driving traffic to it like that's that's good but like a real brand that someone wants to buy for hundreds of millions like private equity is not going to look at that one store that has facebook ads go into it and be like wow right they want to see a real brand where you have that omnipresence which if you're listening and you don't know what that means it means

multiple ways to sell your product right you're appearing in multiple places and you're kind of a bit of everywhere right like mentioned you're on tv you're on radio you've got influencers and celebrities talking about you you're on all your social media you have you know in the in booklets and magazines there's a as an ad for you so to me that's like a real brand that's doing those you know big numbers um and obviously you've done that not once but many times so what were some of the the i guess lessons to people listening right now that are just going direct to consumer with facebook ads and influencers, which I think is great to start, by the way. How do they transition into becoming a real brand and doing all of these things? Well, and I'll start with this, is that understand whatever you're doing right now

from an advertising perspective, two years from now, you probably won't be doing it. It's not going to be that effective. So where are you testing? If, for example, you're living off of Meta, how much are you investing into TikTok and TikTok shops from that? Because again, have you figured out the language that they're using and how to win those channels?

Amazon, for anyone doing e-com, Amazon is a great channel for you that should be complemented their business. What I'm going to share is that for credentializing a brand, retail is great. And basically, but remember, retail is the most competitive space in the world because there's no marketing. There's just the packaging and name recognitions when you're on the space and everyone else in all the CPG companies, the multi-billion dollar company,

want to take you off the shelf. So the question is, how can you unfairly compete with them? And if you're running enough impressions online, you will drive sell-through. For example, with our Karenink brand, we were the first one that's had a regrowth brand into Ulta and a number of the retailers. We had almost every major product goods company, CPG company, come out and launch their own version of their own product. And with one year, they were all delisted, meaning taken off the shelf. Because retailers need to produce their revenue per square inch. And if they're not doing it, revenue per square foot, is they're going to take you off and replacing you the next time there's a reset, either once a year or twice a year. They're going to take you off and replacing you the next time there's a reset, either once a year or twice a year. They're going to take you on with the next as they're trying to optimize,

just like you do creative. So you need to have sell through. So understand that. Do not, my number one advice is retail, bricks and mortar retail is great. Do not sacrifice your direct response brand for that. For example, we were in Target, Target, Target, and Target.com. Target said they had no control over regular discounting of their products and also competing against us on SEO, which was against our contract. They said they have no control over that. It was impacting our Amazon performance. We got, basically, we lost the buy box several times when that happened. Financially, economically, it made more sense.

They couldn't change them. So we decided not to sell to target.com and we basically stopped selling to them. You have to preserve what's core. And those people that get so romanticized about winning at retail, unless you do it right, you can sacrifice your core business. And once your direct response stopped working, then your retail business goes down and you're going to be off the shelves anyways. Well, yeah, and I think it's the hybrid, right? Because I think, you know, nowadays, most e-commerce brands, it's almost the opposite where they don't even think about retail, right?

The younger kids and the younger entrepreneurs, my sort of age, you know, a lot of them don't even think about retail. Or I speak to a lot of entrepreneurs in my programs where they want to get into retail but they're a brand new business and i'm like look retail i'm going to just randomly take you all of a sudden you need to grow the brand you need to grow the following you need to grow the buyer list you need to go to target or whoever and say hey look at my social media look at product sales, look at my year-on-year growth. There's a big, look at all the messages, people asking if it's in stores. Now you have a case to submit to Target when they're reviewing the thousands of submissions

they get. 100%. And let me share this. Just because you can get into a big retailer doesn't mean you should. So Rudy just nailed it. He said, once you have that pent up demand, because we were driving probably about 20, 25 million a year when we went into Alta,

but there was so much pent up demand and everyone knew our product and we were the category leader. When we went in, the sell was massive and over there. When we've launched brands without that same type of traction, we ended up getting this big initial order and was high five. Look at how much money we made from this big initial order until it comes back to a year later. They push it back to you because they can.

So that's why be very cautious about it. Yeah, but I do think, look, if you can do it the right way retail's still awesome and i think for your brand credibility there's nothing like someone walking into the target and picking it off the shelf they just they feed into each other so much and it's playing the same because people say to me really should i do paid ads or organic and i'm like they you can't separate that you got to do both right it's the same here like you want to do both because they feed into each other so well and same for amazon people like really should i do amazon or paid ads i'm like well they feed into both because

some people see the ad they don't want to buy it they go to amazon and now they'll buy it on amazon and blah blah blah so really important crossover and that omnipresence. What about, let's talk outside of the ads and the marketing now, like, you know, building a company to hundreds of millions. You start as a product creator. Then I think you become, you know, the manager and the marketer. But then eventually you get hundreds of employees. I think you said you got up to 500. You know, I was talking to you earlier about getting up to 120. And now you're just like a CEO.

How does life change as you grew these brands? It's interesting. In order to keep the best people and bring in great people, you have to get out of their way and let them do their job. However, having grown up within the company, the one thing you have to understand is that if you take a holistic view of the business and have a systems point of view, you will understand the consequences of different actions. And the problem that people have running companies is when someone's in a department is they see the world through their funnel in their eyes. They do not understand that everything affects everything else, even when it's not intuitive. You as a CEO, but the challenge is, is how do you help educate and develop your

team to have a systems thinking to understand this without inserting yourself in any decision? Otherwise, you'll never grow and people won't want to work for you. And that's really the balance is hiring people that are gritty, that have the same philosophy, the same passion, and have this hunger to learn and are great communicators without ego that will scale your business for you. And that helps you get there. And therefore, when you're in the zone and you can be part of key strategic projects and initiatives without owning them, it's really a blast as a CEO, from a CEO perspective. But it's about your team. Yeah, and we've even shifted.

You know, like I was saying to you, we grew to 120. We've downsized again a little now. And, you know, we were focused a lot on, like, bringing the experienced people in to let us go to that next level, right, to the tens of millions. But a lot of them, like, they just weren't used to this entrepreneurial environment. And we've actually found the best success is, you know, one of my best employees was, I knew from back in England in school,

and he was a truck delivery driver and came to work with me three years ago as a VA, right? On a couple of grand a month. And he's like my top four employees now as an ops manager running three departments. And he was delivering milk four years ago. So he's like, I would pick him over some of the C-suite guys. 100%, be careful hiring C-suites, always.

So I look for grittiness. And if I can, I'd rather hire the head of a department and let them grow into higher titles VP than hire someone at a C-suite. Because especially coming from larger companies, if you're a gritty entrepreneur, and even we're doing 100 million, is my partner and I, we were always gritty with the way we do things and resourceful. And the problem is a lot of people in larger companies get used to a lot of resources and you will never have enough resources. And the question is, is you want people that are resourceful, such as you run out of money. What do you do? You buy a company. It's counterintuitive, but it's about resourcefulness. And that's what you want your people to do. Finding those people through interview process,

through referrals is tough. And that's why at best you're 60 correct on hires yeah yeah and we don't even hire you know when i said cc i probably should have said team leaders because we don't even hire c-suite now like i've been through the mistakes when i have like 30 employees and i hired a c-suite person and it's like real c-suite people you don't even need so you're doing tens and tens of millions of dollars because like you said a real good c-suite person you're way too small and entrepreneurial for them to even be effective they're used to looking at spreadsheets and making big decisions and yeah so now uh you know we're we're we have one you know i have close to 100 staff we only actually have one c-suite person who's a coO and he was a director

of ops for four years with me before we kind of promoted him. And I think that's most entrepreneurs mistake. They think 20 employees or they should have a full C-suite. So Rudy, if I can give two pieces of advice to people is this, is first of all, do yourself a favor and do an exercise of add a zero onto your business and imagine your business at 10 times the size it is right now. How would it operate? What would you do differently? And what person would you be? Now add another zero on. Don't stay there, but just it creates a challenge. But understand this, what your goal is, is you're to identify is what type of person do I need? If my business was 10 times the size, what type of person individual do I need to be to be the leader?

And then see if you can pull that back. The other number one advice, which advice that I'll give that's counterintuitive is at Alanica's Brands, we had an incredible product development department. We had a PhD on staff. We had great product launch teams. We had our product launch playbook. Just because we could launch a product, it didn't mean we should. And we should have, and basically in hindsight, my partner and I got together for lunch last week. We're talking about it. We should have leveraged our balance sheet. And rather than take risk on new products, not a cross-up product, but hero products

and hero brands, we should have brought smaller but just gone out and acquired smaller brands put into our platform and scaled them because that would have reduced our risk and there's always access to capital out there if you're buying a good business and a good brand you can always access capital you don't have to do it yourself and leveraging your balance sheet and leveraging your track record. So this thing of we always have to create it ourselves is hubris, it's ego. And even if you're riding with this massive wind and you can't help the growth that you're having, it's hubris to think you're going to keep on growing all organically. And Amazon business is great if there's some formulas for finding great products, but outside

of Amazon, on e-commerce top. So that's my grace one of the best things i love when i you know i'm around with alex and ty and then you know starting hanging around with some of the shark from shark tank and people like yourself roland frazier who's a friend is you start to think differently right because as an entrepreneur you never get told about raising money or buying businesses and honestly growing up in my 20s when i was building my first multi million dollar company you think of all that stuff is like silicon valley and new york wall street and private equity right you don't realize like that's possible and you can do it so one of my biggest benefits hanging around with people like yourself

and those other people I just listed is I think at a young age, i.e. by 30 years old, I started to see the potential of M&A and buying and raising money to do deals. And, you know, we talked earlier about my celebrity deals. One thing I didn't mention, which I know you'll love and I'll talk about at your event, which I'll talk about in a second too is a lot of the part celebrity partnerships we're doing now we do put an advance in or or whatever but we actually bring in sometimes a partner that covers that advance and i give them 10 at the company so they're like an investor um and ideally on the last couple

they're actually a strategic investor too where where if I'm launching a skincare line, they actually have a $20 million skincare company and are going to do all the manufacturing for me and fund the deal. So I get the capital invested and I don't have to worry about any of the manufacturing side so I can do what I love, which is marketing. So yeah, beyond the scope of today, but the guys listening is um go and learn from people like tom and you know myself now and where we start to think differently versus just ad spunnels and social media because once you started to do a few million and especially as you get to 10 million i don't know if you agree tom i think that's when you've got to start looking at these bigger things

to go to 100 million because you're not going to do it from the same things you did to get to 10. It's different leverage opportunities and you're 100% correct on that stuff. Great. All right. Well, let's talk. I've got two quick questions. I always love 2 billion in sales, major companies, major exit. Talk about a couple of the fails and worst parts of your life because it's not all sunshines and rainbows. And I think that I always say the bigger the company, the closer you fly to the sun, the more the burn, right? So what were some of the worst parts of this massive journey? So here's what I'm going to say is when you're on top of the mountain, the winds at your back and light is incredible and you can't do anything wrong, be careful because not only you're going to

hit a concrete wall, a concrete wall is going to fall on your head from the least likely situation. And for us, life was great. We got term sheets between $55 to $75 million for Kearney. Life was great. And then our $500 million a year manufacturing partner, the only manufacturer in the world that had the license to produce our product, bankrupt, locks on the door, no notices, no access to manufacturers. And what happens when you have an auto ship product that ships out every month? What happens to your cancellation right? So it took us, and the FDA said, oh, we'll get you recertified and you can go with the new manufacturer in 18 months. We were able to get in a bankruptcy, but it was able to compress that to four months.

But by then our profit went from $600,000 a month to $600,000 loss a month. And our bank told us they were pulling our line out. And the other thing I'll share with you is you as an entrepreneur is it's about resourcefulness, not about resources. The next 12 months, as we got gritty and we had no access to resources, the next 12 months were probably the best I ever had. Getting back to that level of property and creating the new version and next version of our company. i've had that i i even recently like some i had you know some employees start a new company like behind the scenes arrival company and had yeah a big uh big load of money frozen because of a celebrity deal we did that and it's like

it was probably the worst part of my business life and i handled it very well i mean because i've been doing it for so long you get used to being punched in the face but then because of it creating new opportunities that would never have happened it's that haven't happened um and i think that's all about your mindset and what separates successful continued successful entrepreneurs from the ones that fail because they just keep going and they deal with it. And by the way, we never quit. And again, yes, I'm special forces, but it's the grit of entrepreneurs that I love is we never quit. Yeah, and I remind my members of that all the time.

Because when you're new starting out and you get punched in the face a few first times, you're like shocked. But I'm like, you got to learn to be a professional boxer. You only get punched in the face for the rest of your career. And then you start worrying about it right uh uh so yeah so guys like i we're short of time we're wrapping up but you you can come hang out with me tom for two free full days um i'm excited next month i'm actually flying out to natchville to speak on how i do my celebrity partnerships at Tom's event. It's at dealconlive, dealconlive.com, September 23rd to 23rd.

Me, a bunch of my friends, and Tom will be there talking about all of this more advanced side of business, not just ads and e-com, but more like M&A and growing the brands and larger acquisitions and all of those things. So it's going to be a great small event. We'll put the links in the show notes. Simon, you want to talk about it for 30 seconds as we wrap? For 30, just real quickly is,

this is the playbook I wish I knew at Atlanta Cook Brands in my whole life. And basically is we're going to give the playbook on how to do acquisitions. If you own a brand that's due between $5 to $125 million to $150 million, or you own an agency between 125 million to $150 million, or you own an agency between one to 50 million, this is the room that you're going to want to be in because the people in the room are on fire. This is the network. But basically, we're sharing the playbook that's cost me

hundreds of millions of dollars to learn and a lot with attorneys and everything else. And we're just revealing it. And it's going to be a blast. September 23rd through 25th, dealconlive.com. Tom is one of the, there's a few people in my life where there's these like super geniuses, super humble people, super smart, and they don't have a million followers on Instagram. And they're the people I love to learn from and also keep secret because I don't want everyone else to learn from them. Tom's one of those few people. He's a genius.

He's got an amazing track record. And yeah, coming to this event will be a really big deal, I think, to kind of just see what's next for you and your business journey. A lot of these things I've been learning in the last few years and it really opens your eyes.

So Tom, thanks for coming on I will see you next month guys check him out I'll put the links in the show notes and we'll see you guys very soon keep living the red life take care Bye.