The Game with Alex Hormozi - Building a $3,500,000 Business for a Stranger in 42 Mins | Ep 836

Episode Date: April 1, 2025

Wanna scale your business? Click here.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

If you wanted to hit 3 million next year, I was like, we could do 10 million next year. I would just say, we're going to take all of our resources. We're going to go all in on TikTok viral, organic, and you're going to deploy everything into TikTok shop and get influences to do lives for you showing all these funny gag gifts. Because, like, the trophies are so built for shareability. Yeah. What's up? How are we doing?

Good. Awesome. Let's talk about trophies. Yeah. So my name's Cody. Cody Shilson. I own trophy outlet. So last year, we did about $1.7, $2 million in revenue.

Mainly trophies and awards personalization. About $110,000 in profit, 6.4% net margin. And I'm third generation owner of the company. We've been in business for almost 40 years. That's amazing. Yeah, kind of fun. So what's the, yeah, what's the goal? The goal is $3.5 million in revenue.

I really want to double revenue going to this year. This year. Yeah. Okay. I think we can do it. So who do you help? So mainly coaches, event organizers, as well as businesses and organizations, which is like the HR departments, business owners, sales managers, you know, people like that.

Okay. As well as gag gift purchasers. I got that. I got that vibe. Yeah. Okay. So how do you help them? So we have a free engraving, fast shipping.

Everything we do is personalized to the business or the individual, something like that. They go to the website, to our platform, purchase, you know, add the personalization info, the logo, things like that. And then we fulfill it if it needs approval, anything like that. But most things ship in one to two days. So, pretty quick. So how do you make money? How do we make money? All right.

So on our website, direct on our website, most of our products kind of land in that $100 to $150 price point. We have products that range from $4, all the way up to $900. So it's a wide range. Most popular item is a four, five, and six foot trophy, which kind of lands about $89 to $130. And then dash plaques, which are like little car show things that guys collect when they go to car shows. And yeah, so it's kind of good. We sell them for $1.25, minimum $50, but we sell it.

thousands of them a year. I've even heard of that. Yeah, there's like these little pieces of metal that people just, they have these big boards that they set out of cars shows. It's kind of funny, actually. I'm always amazed so many ways to make money there are. Right. And that's one of the things our company was started on. So, it's kind of fun. So how do you get customers? Trophy started in 1985, so almost, you know, this is our 40th year. And we've launched our Etsy business in 2019, and we did about $70,000 the first year. And then in 2013, or 2023, we launched Amazon and did about $300,000.

And then last year, we launched TikTok shop, and we did about $270,000 in revenue, but 250 of that came in December alone. So we had a video go viral with 20 plus million views. So we went crazy. So 250 of that came in one month. So that was kind of fun. And you sold those. We sold those, yeah. And not quite family appropriate, but yeah, little death signs that people bought for their boss or whoever was.

So kind of fun. But I was a little crazy for December. No, I love that. And you were able to fulfill on the amount of orders that came in? Yeah. Yeah. We did about 13,000 of those. So do you have manufacturing setup?

Like do you? Yeah, we produce everything in house. Oh, right. So we engrave cut, build it, all it, ship it. Sweet. Okay. Across four different channels, most of our clients come through. Online and internal is through SEO and Facebook ads.

Uh-huh. We just launched Facebook ads and meta about October, November with an agency. Yeah. And then Amazon, we spent about $7,100 a month between agency and ads. And then Etsy. And then TikTok, still kind of figuring that one out a little bit since it all happened in December. But about two. thousand dollars so far got it and adds there so well how many customers have you have you sold so

far yeah so in 2024 uh direct on our website and i have this broken out per channel in a couple slides but total visits is about 90 000 visits to our site about 2 500 orders there's a 2.8% conversion rate and about 781 products so it's a lot of products so do you carry all those or is everything everything made to order yeah okay so it's not so it's not like you're carrying a ton of inventory like you've got raw raw materials and then raw materials but Most of it we bring in from our vendors kind of as we need it. We don't carry a huge, huge, you know, except for like the desk signs and stuff, we'll kind of stock those up since they went so crazy.

But that's kind of an exception to the rule. All right. Then what's been holding you back? So I think it's marketing. Fulfillment-wise, we proved that in December. We can handle about double fulfillment, I mean, with limited complexity. So I just need more people to the site, more people buying, and we can fulfill it. And also we're very product heavy with low margins.

So working on the margins. piece getting profits up a little bit. Do you want to like sell this company eventually or like what's the, I mean, do you want to double? I haven't really had any thoughts of selling, but I want to create a business that is sellable. Yeah. So I have the option if I want to sell or no. But I would love for it to be a fourth generation business someday.

Got it. If that's an option. But yeah, that's kind of the ultimate goal. All right. So how many locations do you have? Because you have brick and mortar, correct? Well, we have one retail location now. We have two locations total.

We closed the other retail location down and it's production. only facility. Okay. So the other retail location, you know, does maybe $150,000 in revenue out of that location. So just like walk in traffic and whatever. Yeah, walk in email stuff. Does it break even? Not really. Okay. So you have a manufacturing facility in one retail? Yeah, which also does some manufacturing as well. Yeah. Is there any downside to just like consolidating to the one? It's something that we're actually looking at. Okay. And go more e-commerce and kind of cut in the retail business. I mean, most of our stuff's e-commerce anyway, so. I mean, online. Retails. I don't think it's going anywhere. And I don't think many people are like, you know what, I'm going to go to the trophy store today.

Yeah, I've never heard somebody say. Yeah, like all my list. I walk by. Like, oh, yeah. Returns of videotapes and then go to the trophy store. Right. So these are the issues. What are the metrics you got? Yeah, so numbers, 1.72 million in revenue, about $110,000 in profit, 40% gross margin. I would have expected gross margins to be higher for this business. And it varies per product. What? Tons of, you know, like certain acrylics.

I was like expecting like, you know, one dollar. Like you buy these trophies and they're like, you know, a dollar and you're like, there's no, like this is made of rubber, you know. Yeah. Okay. So it just varies widely between the products and platform and stuff like that. But in that margin, about 6.4%. LTV 133 and then KAC 1190, LTV to KAC ratio, 11 to 1. And that's blended across all channels.

How do you come up with pricing? I'm guessing. For the most part, or I'll look at some competitors, but there's not really good apples to apples comparison necessarily. Do you have like a cost plus or like? Yeah, so I have massive spreadsheets of all of our costs, you know, things like that, factor in labor. And then I just kind of add my margins to it. And, you know, have slowly been trying to bring that up over the years. What percentage of customers are our new versus return?

Got, I would say probably just on our website and internal customers, probably 50-50. Okay, because it's a four-year-old business, so you think there'd be a decent amount of return. Yeah, a lot of our business, I mean, $530 in revenue comes just internal. So emails, calls, things like that. Most of that is repeat business. Do you have very high fixed costs in this business? Not too bad, no. Because if you have half the business comes in from word of mouth, I would expect the margins to be higher, like the net margins. Because I wonder like, is it, I just thinking of this as big hypothetical. It's like if we got rid of all of the new customers. And we just sold the 500 and something thousand from return customers. That should be free customer acquisition. And then we should make money.

Yeah, right. But looking at this, I'd be like, I don't know if we would make money. Yeah. Our cogs are pretty high. I do think there's a pricing issue. Yeah. Which we'll get to. Okay. Okay, this is good. But your LTV to CACs pretty strong. Yeah. It looks like. Yeah, it's pretty decent. And I learned that a few months ago coming here the first time. So I started increasing. That's not like some revenue. That's left out. That's worth profit. That's profit. Okay. Yeah. Yeah. Interesting. And we estimate people stay about three years, excluding Etsy Amazon. Yeah. Those ones are a little hard to calculate. But through trophy outlet, they order yearly. Mm-hmm. pretty consistently. We've got customers, been with us for 30 years, you know, things like that. So, so pretty heavy repeat business there. Once we get a customer, they're fairly sticky. So with pricing, I'm going to, I'm going to head on this one because I'm almost positive. There's a big pricing issue. Yeah. Who was in charge of pricing that whole time? Like, you took it over from your, I guess he took it from his old man. So like your third generation.

Yeah, my parents ran the company. They didn't have a price structure. They just kind of. And on an annual basis, do you review all prices? Every year. Yeah. Interesting. It's about February, March of every year is when our vendors raise prices, so then I adjust accordingly. Got it. Was their margins the same when they were running it? Much less. Lower? Oh, way low. Like, not making money at all.

So my mom was running it. I remember very distinctly looking at a product, and the cogs on that were like $50, and we were selling it for like $45. I mean, this is not work. Yeah. So I immediately raised prices. It like, you know, doubled them almost. Okay. And then constantly just continually up them. Yeah.

I think I have some ideas there. All right. What else you got? All right. So channel breakdown. So direct traffic and internal is our, you know, biggest. 13 to 1 LTV to KAC ratio. Amazon, our highest conversion rate and 9.6% conversion.

And, of course, the blended 11 to 1 LTV to KAC. Interesting. And so you don't have LTV metrics on TikTok? No, couldn't quite figure that out yet. Okay. Well, the easiest way to do it is just go total revenue divided by total number of customers. So you did 262. Do you know how many customers you sold?

I think it was about almost 13,000. 13,000. So, okay, so 20 bucks. That's not about right? Average, yeah. Unless they have a broader value, right? We just don't know how many times they've purchased. Right, which is one as of this point, you know.

The thing is that might be artificially inflating your LTIPAC metric because you have zero KAC there. Okay. Or did you not? No, that's explicitly. You just skipped it all entirely from the calculation. Yep. So you want a double revenue. Yep.

Got it. What's this I hear about you wanting to buy another business? Yeah, so I had a business reach out to me that's in the same industry in the St. Louis market that we're already in. So he's getting old, wants to retire. And what's he doing in revenue and profit? He does about double what we do, about 3 million in revenue. I don't know profits yet or anything. We haven't even got to that point yet.

But he's got a, from what I understand, he does pretty decent on his margins, just through communicating and talking to him. He does a lot more custom stuff, so which is a lot higher margin on some of the, that stuff. He has a lot of bigger orders, which is nice. So he can bring it in from China or from elsewhere and keeps his margins low. Or keeps his margins higher. I'm sorry. Yeah, yeah. I got you. The biggest concern with him is 70% of his revenue comes through one customer. Yeah. So that's a pretty big, pretty big red flag. Wouldn't buy that. Wouldn't buy that? Mm-hmm. Gotcha. I would try and find out, if I could, who the vendors were that he has in China for his connections for his raw materials. Yeah. So that I could try and use those vendors. Yeah.

That was actually one resource I thought was, well, if I could buy this, then it's cheap enough. It's monstrous customer risk, and especially if you have somebody retiring, that one customer might be. Even if he was willing to stay on for two, three years, four years to help that transition? Well, part of it is what kind of business do we want to build, right? So you just want to, like, you're considering closing down the first location. We have to, basically, there's a bet that we have to make, which is like, do we think that the future of this business model is lots of brick and mortar locations? If so, then we have to, then we have to, to think they're at the Brick and Mortar Model in a lot more detail with the unique economic return of capital. Or it's we're going to be online.

And if you're online, then why bother? Which most of his stuff is shipped as well. It's not retail business. I mean, it's not brick and mortar. Yeah. I mean, he has a retail storefront, but most of his business isn't. Is online. Yeah.

But 70%. It's not necessarily online. It's through basically wholesale. Yeah. Customers. That sell, you know, large, large clients, things like that. So that's a super come to like. I'm not thrilled about it.

Yeah. One, there's the customer risk. The other thing is it's like it's not the business that you're, even though you're obviously in the trophy business, it's like it's not actually how it's basically all net new. It's like B2B versus B2C because we have to think about all available moves on the board, not just like this. Because like said differently, if he hadn't emailed you, would you have approached him? I would have actually kind of pursued it a little bit just to get the information. I was a connection through one of our vendors. So that's how I got to know him.

Well, I'll zoom out from the back forward, which is like, what do we want to be when we? grow up. Basically, this is going to become a media slash marketing business that monetizes through trophies. Right. Or you can go the B2B wholesale route, which is probably like outbound sales team that's calling wholesalers and whatnot. Yeah. From what it sounds like, it sounds like you're better suited for the e-commerce direct to consumer side. That's what it sounds like. I don't know, like. Currently, that's where we're at. Yeah. We do some wholesale currently, and it's just easier. Yeah. But that just kind of came naturally.

It wasn't anything we pursued necessarily. But, yeah, majority of it's all e-commerce. You might have one of the simpler plans that I have. Yeah. Yeah, which is, I mean, simple doesn't mean bad. Simple is good. You know, sometimes you have like 10 things to do. It's better than three that move the needle a lot.

And I think you're kind of in that situation. There's three big things, but I think we'll want you come over here and then we'll net it out. What percentage of customers are gag gifts? So that's the Amazon Etsy. TikTok. TikTok. And all that. So that's like 40% percent.

Yeah. Roughly. And that's kind of been the fastest growing. Yeah. Since 2019. That's for sure. When we launched that, which is all under a different brand technically.

Okay. We start a different brand back thing because we're, we don't want the explicit vulgar to be under trophy. Sure. You know, church moms and stuff get. I hear you. I hear you. With this business,

like fundamentally, you just have, it's, you've traffic in a conversion page. Like, and then if you already have, let's call it for right now, not a constraint on many,

or anything like that. The three big kind of levers that I want to go off of is number one is consolidation. Okay. Pricing, which also instantly has to profit. Absolutely. And then media. So from a consolidation perspective, we have the skews, right? Yep.

And then we also have the brick and mortar locations. And then we kind of have like model. So like in terms of like how I'm thinking through this. Okay. So from a skews. perspective, if you're not carrying that, like, normally I'd be like we need to massively cut down on skews. But like, if you're not, if you don't have like this warehouse full of stuff and it's just like more options for people to purchase, I don't think we need to like get rid of anything. And a lot of

the skews too, it's the same product just maybe for the ball versus $5. Yeah, right. It's a, it's a goat trophy and you just put a different plaque on it. Exactly. That doesn't bug me. And if you're like, man, it's, it's, it's super hard for my team to, to build all these different things. And I'd be like, all right, well, then we should, we should look at that. But if it, it doesn't seem like you're stressed on the manufacturing side. But that's where my skill set lies to because of operations. No, that's good to know.

Where's the constraint, right? So the second is the brick and mortar, right? Yeah. So if you have this retail location and it's basically breaking even or losing money and that's not even the future of the business, then to me, I would say, let's just save our $50,000 a year in rent

and then just add that to the bottom line. Right. I feel like that would be a good idea because that would increase profit by 50%. Yeah. Just like chill. Pretty much instantly. Yeah.

And also there's just like the headache of like it's this thing over here. Yeah. And you probably just take the couple good people from there, bring them to bring them home. Right. You know? Yeah.

So that feels good. So the next one is model. So this is the thing that I'm really like, I don't know, torn on. At least for me, what appears to be the obvious solution is to go on the, where the fast growth is, right? Which is the gag gift thing. The problem is that there's zero kind of reoccurring nature of that, right? So it's basically like when you have that business, you have essentially a media arbitrage business where it costs you almost nothing.

You get a customer. You make a spread. And then that's the business you're in. And every month you're going to be looking for how do I make new media? And that's the game you're in. If you want to go, I want to just get every league in the nation. Like if you were like this is like if I wanted to make this the most valuable version of the business, not necessarily make the most money today, but the most viable version of the business, it would be I'm going to be really targeted with the. The few avatars you have like leagues, event organizers, whatever, and say like, these are the four

avatars we have and we're going to be targeted with our ads for those people and our SEO. And the whole business is around like, we only deal with customers. And I would probably even say that you do you have phone sales or anything like that? Some. Or email to place the order. What's the average order value for the, like a week? So internal orders, I think it's like, I want to say it was like 350 or something like that. So it's a higher order value.

Yeah, yeah, for sure. Okay. Because I wonder if, in some ways, you have two businesses, let alone, like, if you were, like, forget about the third one you're thinking about buying. Like, you already have two. And I'd rather have one. I'm not saying cut the one that you have. It's obviously a 40-year-old business. But, like, it really have to make that decision. And that's actually not a me decision. It's a you decision. So I'll say it the way that I think Lela loves framing opportunities. Because I always think about upside. She always thinks about downside. And so it's like, what problem would you rather solve? So in the gag gift path, the problem that you're going to have to solve is you're always going to have to find new cheap forms of media. So it's going to be like TikTok shop is what it does today and live shopping and that'll probably be good for another year or two. And then it's like that'll start to get more expensive and other people will compete. And it's like then you're going to be in the next, whatever the next game is. And you're just going to have to get really good at paid ads and creative and conversion optimization on the site, increasing average order, that kind of stuff. The other path is you build either an outbound sales team to that. that they can sell these these kind of B2B offerings that are, you know,

or B2C if you want to consider the fantasy leaks. And or just like a meta, just like a simple meta ad strategy that would lead people to call the number functionally. And then there you're saying, cool, our goal is to be your turf your provider for life. And I think the fact that your 40-year-old business sounds really good. It's like, hey, we're 40-year-old business. Our goal is to be your manufacturer for life.

And so of course, we're going to do this one. But if you want, we'll also give you 20% off next year. If you make the order now or something, I don't know. I play around with that. But which of the two paths sounds like the life you want to live? Yeah, that's, gosh, that's tough. Only because media for me has always been a hurdle. Do you like it?

Okay. Fair. I will do it, but I don't know that I love it per se. Because if you wanted to hit $3 million next year, I was like, we could do $10 million next year. I would just say, we're going to take all of our resources. We're going to go all in on TikTok viral organic and you're going to deploy everything in a TikTok shop and get influences to do lives for. were you showing all these funny gag gifts? Because, like, the, the trophies are so built for shareability.

Yeah. Like, and so that's, I mean, 20 million views is a monster video. I think if that was all you focused on, you would be able to figure out because these are funny. Right. And I think having, like, little skit scenarios where people, you know, walk in and they see the boss is thick or they change their, their plate or, you know, their, their, their plate or, you know, someone loses and then it just says, like, biggest loser, you know, like that kind, like the negative versions. I think that would just make for really viral content. And I feel like that would be easier to replicate, just constantly doing that. The league's thing is like, that's the, that's the very stable version of this business.

And if you did ultimately want to sell it in the future, you being able to go to a potential buyer and saying, like, I have 5,000 leagues that buy our trophies from us every year. And leagues on average stay for 12 years, you know, like guys who do fantasy or whatever it is. It's like, that's fairly, you know, that's a pretty, that's a pretty reoccurring business. You know, that's a, that's a pretty good business. Yeah. Harder to build, though, and slower. Right. That's also why it has more money.

So that's the, so if, if between those two paths, the, like, I would like to just make more profit now and potentially scale faster, then we can talk about the media version of this. I think that's probably where I would. Okay. Cool. So first things first is we're going to consolidate attention. So we're going to shut down losing location. So that should right off the bat. be a plus 50% improvement to profit, which is great.

And I think it could be more than that because your attention is gonna not be split anymore but right two locations. Okay, the second thing, you have basically something called a cost plus model. You look at your costs and then you add a margin in and whatever. And a lot of businesses do it because it seems very logical.

The problem is every business I know that does a cost plus model doesn't make a lot of money. And so you want to switch to value-based pricing, which is purely based on what someone's willingness to pay is. And that could be unlimited. And it doesn't matter what your stuff costs because why do they care what it costs, right? And so basically, like, as your vendors increase their costs to you, in some ways, it shouldn't have any effect on the price of what you sell because the price of what you sell is completely divorced of that and based on what somebody is willing to pay. So in terms of how we can do this, there's a couple thoughts here. So A, which will seem a little bit less scary, is I would consider, and this is sound crazy, but like monthly, like 5% price increases.

Like just keep going and just keep going. That is like path one. And the thing is that every time you raise the price by 5%, you double your profit. Or I'll say 6% if you want to be like, hey, I doubled my profit this month. Then the next month you can raise by 6% and then more than double because it's 6% times the 6%. So that is that is one way. The other way is that you just start immediately split testing kind of like 80, 20 on your highest sales velocity items. And so this is simple, right?

This is simple to do. You have to do any thinking, you just add it, and that's what it is. This one will probably get you more profit faster. It just takes a little bit more thought. So you'll take those four foot, five foot, six foot trophies and just start like, just keep bumping the price and just seeing what conversion it looks like. Because what we're trying to optimize for it, did you have an engineering background? Okay, you said you were good of the manufacturing. No, my dad came from manufacturing, so I don't pick it up there.

Yeah, so what you're trying to optimize for is gross profit times units sold. And so if you think about it's like, you know, down here, it's like I'll have a ton of sales velocity, but I'll have low, low margins versus here I'll have fewer, you know, fewer items sold. But it's like, where's the sweet spot where I get the most amount of units sold at the highest gross profit? it oftentimes it's it's higher than you think it is because where i think a lot of entrepreneurs get stuck is like sales velocity goes down and then they get afraid but the thing is is that you will usually make more money before you make less money when sales velocity drops usually so it's like we sell 10 people at you know with a hundred dollars a gross profit and then when we you know move the price up it's like we sell 80 people but we're at 150 but you're like all the sales teams like i don't know

do the price the price seems really high or like how the conversion on the page drop It's like, yeah, but we're making 50% more money. We lost 20% of sales. If it were me, I would 80-20 this, and this is what I'm solving for for pricing on the most sold products. Okay. You can have a much faster feedback loop for the testing. And so in terms of cadence for price tests, would you do it on the site more? Do you think you would be doing it on the phone?

It'd be on the site. Okay. Yeah, because that's where customers see the pricing, even if they call or anything like that. Yeah. I don't know how many people like buy. Is it a super price sensitive market? Trophies, yeah. Okay.

Like car show guys are cheap. I'll bet you what's interesting about this is that your recurring revenue business is very price sensitive. It makes me lean more towards the gag gift side anyways because it's like we can get customers for free and we have far more pricing power because they're in the moment. They think it's funny. Whether it's $8 or it's $12 or $16, like I kind of just want to buy it. Yeah. But that's the difference between 8 and 16 is monstrous, right? Yeah.

For the business. So psych price test and I would probably. start with the gag. Okay. Gifts here. And then I'll make three. Can you try one, six percent on a boring side? Now, this is the major part is if your focus is going to be media and that's going

to be the direction that you're going in. Was there an influencer or something who made, who made the video that had the trophy in it? They got tagged. Our product on TikTok shop got tagged and we sold 70 to 100 off of that. And they did a follow up video. And that's the one that had 16 million views. Okay. How many TikToks do you make in a month? Right now, we're doing about one a day, and we're trying to ramp that up to three a day.

Okay. Yeah, because the thing is, is like your Amazon and Etsy, I would imagine, are fairly passive. Normally, I would consolidate it. If you were like, I'm running all these things, I would say, like, let's focus. But if that's, like, kind of on autopilot, and I am familiar with, like, Amazon handles a lot. So the direct site traffic right now comes predominantly from SEO. So talk me about that. Do you have an SEO firm or you're going to do? No, it's an SEO firm, agency. How long have you been working, though? This one, about eight months.

Eight months. Additionally, I've always had pretty good success with SEO. Okay. And then we stopped SEO because the previous company wasn't performing. We just let it go for several months and then hired another company. And then when these guys came in, it started going back up again. What stops you from like doing more SEO? Or rather what stops that, like, if you were to say, hey, because I mean, when I see 13 to one, right,

I'm like, that sounds interesting. If you were to say, hey, I want you to give me, like, three clients worth of focus so that you can give me three times the backlinks and three times the articles or whatever it is that they're turning out for you. Is there anything that's because if you get 13 to 1, it's like we should spend as much as we possibly can on that. And that's why I started meta is. But it's different, though, right? Because it's interruption-based ads versus SEO or it's intent-based. Because it's also, like, these things are things that are not taking your time.

So this is like Media 1 is SEO max out. And the SEO company wants me to do Google ads. Yeah. Throw into that mix. Okay. Mm-hmm. Yeah, especially like these are both intent-based, right? Yeah.

Like at the very least, you should own terms, which is like all your names and derivatives of your names. Like I've rarely seen anyone in any business just own their own terms and not make money off of it. And some people are like, why, I don't want to pay for a click I was going to get? The thing is, is like, you're not always going to get the click. And so having it there, I'm like, you're going to make the money. Like, just, you know what I mean? But then the second version of that is, you know, associated terms.

That's where the, like, the long tail keywords. And because yours, because the boring side, so this is all, this is all like the boring side of the business. Because trophies are so like, oh, we have to get trophies for the team this year. It's like, they're in this window and they're just going to buy whatever is like pretty much immediate. Yeah. So I think this all makes sense. I don't know if people, I mean, you're running the meta ads to get the boring trophies. I would bet that that's probably, and you could do it.

But this feels like it's less interruption based, more high intent based. Now, gag gives 100%. No one's like, hey, you know, fuck your moon follow the plan, you know, trophy, right, or whatever. So this is the, like, if we're looking at this, these are all what I would consider like black and white, very low lift, almost guaranteed to make you more. money moves. Almost all of these will just make you more money. This is 13 to 1. This is probably going to be high return. This could double the profit. This takes, adds $50,000 to the bottom line. The price says for sure are going to increase on the gag gifts. So now we can talk about the media side. So you're going to go from one to three a day. I think that's a good idea. What I would

suggest you do is look for, so there's going to be you. So there's going to be you. So we're going to go from one to three a day. And I think that you should focus on trends and memes. So like, because this is a gag gift brand. So it's okay for you to just like be silly and ridiculous. And so like just hire a 17 year old. Oh, it's a turn scroll. Yeah. Yeah. I just feel like what's like, what's like what's trending right now? You know what I mean? Like some, what's interesting is that a lot of these TikTok ones also do well on Instagram. So you could repurpose there. Do you, do you post on Instagram? Yeah. Okay. Yeah. So started. Yeah. You'll, you'll get double, you know, you'll get double use on that but yeah tic-tok is like the perfect platform for you for the sbi i gives like it makes complete

sense to me they did 250 000 in a month and so when i the reason i said the 10 million is like okay well that happened on accident let's do it on purpose and if you can do 250 a month just from that it's like well there's three million i think you getting really ridiculous with the volume will get you a lot better and i think this is one of those things that you should live close to like you like you like you these things are all things that you can do probably the week you get back you're what I mean. This one is going to be the, this is like the big commitment of what's the bet we're making. The bet we're making is that mastering TikTok, live selling, et cetera, is going to be the way. Now, the second part of kind of like TikTok mastery is going to be influencers.

What's nice with TikTok shop is that your stuff is automatically going to be listed there and other people can, make videos for it. And you're in the price point that's perfect for TikTok shop, like 20, 30, 50, like it crushes for that stuff. And it's such easy videos for people to make. Right. And I mean, fundamentally, like, these are basically one-time work. This is the only ongoing work that you do. And so trends and memes, and I'd be posting one to three times a day there, repurpose on IG, right?

That's just free traffic. And then the influencers will also kind of, this will be like a loop here. So it's like, they'll give you, like, they'll do something that works well. and then that will feed like it'll just be this nice loop where they're also creating content for you okay and then i'll put i'm going to put number seven on here because i think this is worth it the ticot ads which you said you just started you make the ad right or sorry you make the content you already know where i'm going i knew it you're making content that ticot content 10% go viral whatever and then 90% flop right then this you put

add money behind it and you send this to influencers and say make stuff like this because this is what's converting and then they'll make versions of this that'll also inform your content which you'll then try to make iterations of what they're doing and so like your kind of your source like you're starting here's the ticot content some does well great push ads behind it by the way guys here's the ones that are working well they make stuff you can take theirs push money behind it as well and model it and make for permutations of it. And so for this stuff, I would be kind of hook-centric, meaning like for most short-form platforms,

like the hook is everything. And once you have a winning hook, I would like reuse it over and over again. And so like if you have, you know, whatever your winning hook is, and then you could just basically sell down the line of skews once you know. Yeah, exactly, over and over and over again.

I told you, you have a, You actually have a really simple one. The nice thing is that I have a lot of confidence in your, like, there's basically no, like, I'm not really sure. Like, site price test could easily, like, 2x profit. Yeah. Like, on its own, because the margins are so sim right now, right? 6x, this is the 2X on profit, for sure. SEO max out.

Well, right now it's 50% of revenue is coming from that. So it's like maybe we get a 50% boost from them doing a better job on it. PPC will just get you good return. this might give you like a 10 to 20% boost. So I don't think it'll be huge, but it's like it's free and it's a one time set up. So it's not hard to do. TikTok's going to be the big lever of like,

how do we go from $1 million to $10 million? It's like if you did nothing else but just say like a year from now, if all we did was master TikTok and TikTok shopping, we would win. Like if you did nothing out. This is just going to take all of your existing business and make it more profitable so that you can take all of this cash and float into your. And the fact that you have such low margins

excites me because when you make five or 10% improvements, you double or trouble. And the fact that you haven't liked that there was no pricing discipline, like there's no, there's no like process to pricing besides like we'll just keep raising it when our costs go out.

Usually there's just like when I see a business like that there's like massive unlocks. Like I'm saying 6% on pouring trophies but like you might be able to push 25. Yeah. And that 4x is 5x is profit. Right. And it gets very interesting.

Yeah. And the gag gifts have much higher margins. Yeah. And let me add something else in. What's the offer that you have in the box? Usually it's a little code that says like 10% something to order here. Why don't you give something much better than that? So you have to come up with a really compelling offer to get people who are buying.

Because the important thing is, so are you doing fulfillment for Amazon sales? We have some FBA, but most of it's FBM. Okay, great. So you're fulfilling most of it. That's wonderful. Okay. So, and Etsy, same thing. Etsy, we fulfill everything. Yeah. Great. Okay. So that means that we can put something in the box to be really compelling to get them to, to buy something. So if now Amazon and Etsy, the purchasers were buying there, are they more bread and butter people? Are they more gag people?

I would say more gag. More gag. Okay. Because they're more like funny, death signs, funny sayings and stuff like that. I would put a bugo offer in or a, so I would buy. one get one to two free and then just fix the pricing of the one so that it makes sense yeah but then the i would basically have this little thing here so that would be the headline on the top of my little my little my little do dad yeah you got your QR code and then i would have my top one two and three gag gifts okay because they just bought one so it's like let me tell you the other gag gifts that people buy the most of got you and i would put that into every one of the boxes.

Okay. For them. And would you have that QR code go back to that channel? So like Amazon or would it go back to our website? It's a good question. It's a good question. Well, to make that offer, you'd probably have to bring them back to the site. Yeah.

Well, the kind of not as worried about. We just got to fix the pricing. But like, either way. I mean, it would be an interesting test, but I think this is the better, like, because you can make a far more compelling offer. Yeah. The other thing is, what do you, how big is your email list? for trophy side.

I think we have like 10,000 contacts. Okay. Well, guess what? We just found ourselves another couple hundred grand. So let me tell you a stat that'll blow your mind. Most mature e-commerce businesses get between 30 and 50% of revenue from email. We're missing out a lot on that. So there's probably like one and a half million sitting there.

Yeah. And that's all profit because there's no ad spent. Most ecommerce businesses basically break even or lose money on spending ads to get customers, and they make it up with their email follow-up. Nine, it's going to be email follow-up. Okay. So what do you use? Use big commerce.

So they probably have, so there's going to be two different types of email that you're needed to do. So number one is going to be flows. So these are based on user behavior. So when someone visits a specific product, they should get like a five email sequence. I'd be like, hey, saw that you were looking at the goat, whatever, right? And that should just, that should happen for anybody who ops standard does a two-step or abandon carts, right? The other piece is we need the long-term nurture.

All right. So what I'd recommend is three times per week. The question is, it feels like a lot for trophies because trophy is a less frequent purchase. The gag, I feel like is a, it's like, if you buy one gag gift, you'd be willing to, like, buy them for many people because you just think they're funny. They are separate brands, though, because you have, like, Like, okay, so I would say this I'm cool with on the gag gift side. Because right now you're not making any return sales anyways, right?

So you might as well get. We don't really have an email list for the gag side because it's all through. Oh, because it's easy. Does TikTok not give you email? Okay. So I think we'll go one time a week and we'll not worry about the gag gift. Okay. I think just one time a week of, and if you were basically domain, your domain health,

your domain authority stays healthy and your open rate stay okay, you click the rate stay okay, I would increase frequency. Okay. So you start with one a week and then you're probably thinking, okay, what am I going to email them about? Right.

Right. So when you have customer stories, cool trophies, because I'm sure there's every week there's like one trophy or something that's just like interesting that you guys have, right? Probably stuff about recognition,

status, and cheapest compensation. So I think if I were to, if I owned your company, right? So I'd be like, okay, are we in the trophy business? No, trophy is what we sell, right?

but it's really just the vehicle for giving people recognition status and compensation, right? And so my, the things that I would email would probably be about how you could either give your team a pay raise or you could give them a trophy. And believe it or not, here's this research. The trophy is actually even more meaningful. So they like it more and you like it more as a business owner. Right. So it would be that kind of stuff that I'd be, you only have to write 52. It's not that many emails, right?

You could literally probably do it in like a day and a half or two days. and I would be hitting this and then I would just weave in examples and the examples will do enough modeling for people to basically click and then go back to the site. Because all we're trying to do is just bring them back to the site. Now, on every one of these, these emails,

I would have a PS, a funniest trophy of the week. So think about like newspapers. Like they have all the articles that are serious, but then people just buy them to read the funnies or they read the cartoons. And so we do the same thing here because you probably have some hilarious trophies that get made, right?

Yeah. And then just be like, explicit you know what I mean I think that people would find it hilarious okay um and if you're worried about it's supposed to then don't put those ones but like I still think that you have funniest trophy the week and even it and like this is me taking the complete extreme stance people people may care about this people might just think this is funny and if you just did this it's like you're almost just sending them jokes and memes it's the same as making content on the internet and so if they're like oh god what's the what did they what did they make this week right

right and then again it's just like I just want to stay top of mind I want to remind them and I think about this also seasonal. So what are all the things that are coming up that like that are coming up next season? Because you know what the buying cycle is for trophies. So it's like what are like, okay, Christmas is coming up. Okay. So there's going to be end of year bonuses for people. There's going to be, okay, fantasy. What fantasy league ends in October? So probably like hockey ends or whatever, right? Like best costume, concept. Exactly. So it's like we have to remind them of what people get status and recognition for using trophies. That's the job of the long term nurture. What things are people going to be rewarding next month that we get to have to be people buy this month. And we just every month,

we'd like, you look at your calendar. You're like, I have to think of four emails that apply for next month. Right. And I would probably, I'd put this as like, okay, I've got my business one. I've got my, you know, season one. I've got my sports one. So these are like my buckets for my emails. So every email, it's like, it's almost like you're hitting from a different angle and reminding people of different components of their life. And so that's, that's probably how I'd have my long-term strategy and provided all of the metrics look good, I would just increase frequency. Yeah. Okay.

So keep it low in the beginning just to like get a feel for it. See how like the first couple of emails are going to shake out because you're going to have a super responsive list. And we want to keep these all text. You can have I would say link to the image because then the curiosity is going to drive the click. And also image based tend to get lower deliverability rates than like full text one. And when people opt in or when people purchase, or opt-in, the abandoned cart. The first one I would have is reply back for funniest trophy of all time.

And so as soon as someone opts in, it's a double opt-in, so to increase your deliverability. And so they'll reply back, and then it's an automation. You don't have to do anything. And then you'll send them the link for the clickable picture. And they'll be like, this is ridiculous. And then underneath of that, so when you have a clickable link, you want to have it take them to a page that looks like this. And then here you have So like you can have the funniest thing

But it's also CTA to get someone to buy someone Gotcha, okay Just not in the email Yeah Yeah They see it and if they want to buy it It's right there

Right Super cool Well I think we found a few doubles Yeah In the business Absolutely Feel all right A little money money Matt

I think you will significantly More than double profits Well that gives you 50 And that's the first thing we do This could easily double profits If we just add the 6% right that's all we'd have to do um if you increase SEO you will make more money how much more we'll see but more this is free money but this is actually the biggest i think this is actually

the biggest finding you have is the emails yeah 30 to 50% of revenue like clockwork yeah especially and so it's interesting is the the less ad dependent your business is the higher the percentage will come from you so like if you have a fast growing company that's spending more more money every month and the percentage by math would be smaller when you have you have to have a fast-eastern you have have a more stable, older business that's coming from email, like, it'll be greater and greater. Like, I know a company right now that is 80%, they do a billion a year. 90% comes from email. Wow.

Yeah. Okay. And I'd say also in that kill Facebook ads for trophy outlet, trophies. It just, it wouldn't have been my, I mean, right now it wasn't profitable, if I'm not mistaken. I'd rather redirect resources to the things that will make it more money. I'd rather just do TikTok ads instead of an ad ads, given that's like you did 250 for free. Right. Yeah.

Right. Absolutely. Feel right? Yeah, I feel really good.