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The Past, Present, And Future Of eCommerce with Jason Boyce

The special guest who is one that has created two courses for us at WealthFit is Jason Boyce. If you are getting to know him, you are going to love him, especially if you are in the eCom space. If that has always intrigued you about making money or profiting from selling on sites such as Amazon or eBay or Etsy. If it's making money and profiting online in eCommerce, then you are going to love this show.

Jason Cofounded Dazadi.com. Dazadi is a retailer of sports and outdoor equipment going all the way back to 2002. He has served in the Marines. He has served as a CEO. He was also an Account Executive at Johnson & Johnson. For those of you looking to make that transition, you're going to be inspired by his story.

In terms of what you're going to discover in this show, we're going to talk about the Wild West days of Amazon. What it was like to be able to pick up the phone and talk to somebody at Amazon and establish a relationship with. We're also going to talk about how he turned his back on $2 million in revenue. Why would someone do that? That translates to any business. If you're even remotely curious about the future, we're also going to talk about what the future looks like for eCom. It's interesting to think about that because it's truly only been a couple years since eCommerce has been a thing in the grand scope of things.

Dustin
I am with Mr. Jason Boyce, who is an expert in eCom and Amazon. We're excited because you're creating a course for us here at WealthFit. Welcome to the show.
Jason
Thank you for having me.
Dustin
Jason, I want to jump right in. I want to go back. Life is good, business is humming and you're cranking. You’ve got an eCommerce company doing close to eight figures in revenue at this point and 2013 hits and you lose $1 million in that year. What happened?
Jason
I always say you can't call yourself an entrepreneur unless you've lost $1 million in a year. A lot happened. We've had a couple of these, what I call near-death experiences in the past. One was in the 2008 financial crisis. Our categories are very discretionary. When folks were losing their jobs, they're not going to buy a pool table or a ping pong table. They're going to put food on the table with what money they have. That was the first. In 2013, we got a little too big for our breaches and thought we would go after market share instead of profit.
Dustin
What made you think market share? Did you think there was an arms race going on or why did you think to abandon profit?
Jason
We weren't looking at all of the metrics. We were looking at the sales quantity sold and the sales metrics and they were looking great. We noticed that if we lowered our retail price, we'd sell a lot more, especially on Amazon. We were trying to compete with some other big guys. Especially when you're driving traffic to your own website, Amazon aside, when you pay more for the traffic, then you make when you get the sale and it's a problem. Especially when you don't have big repeat customer business, which we don't have in the home rec space. We were spending more than we were making on a sale. We thought we were doing great because sales were growing like crazy. One day you wake up and you go, "That's a big number," and it's red.
Dustin
Did you think by driving so much volume you were going to get a better deal on what you are selling and economy is a scale essentially?
Jason
That was part of it. Honestly looking back on it, we became almost addicted to those sales numbers. We only cared about sales because it's fun. It's fun when you do some tweaks. You lowered some price and you see the numbers go up. It feels good. It's a rude awakening when you look at the bottom line.
Dustin
This is private, your company or it was. It looked good to acquire a customer. Was that in the conversation?
Jason
We had read a lot about VC-backed companies who were fine to lose money. Amazon lost money for a decade before they turned a profit. We didn't have the same VC investors that Amazon did. We didn't have the money to fill the gap. You can absolutely build a good strong company not making money for a long period of time as long as your investors are happy and they keep putting money into the company. We miss that part. We didn't have those investors early on. We thought we were doing the right thing because we were reading all these great, fascinating stories about these companies with high growth rates. We wanted to be one. We didn't put two and two together. We ended up in a very scary situation. I thought better.
Dustin
I thought I saw something where you said maybe it was in an interview or an article. It was the classic thing that entrepreneurs do, which is to throw money at a problem. You did that in 2013?
Jason
We absolutely did. We hired a lot of high-price staff members who didn't know how to make a profit either. We threw a lot of money in advertising that wasn't converting to a sale. It's a great way to go out of business.
Dustin
I've done it time and time again. I see other entrepreneurs do it. At the end of the day, they're frustrated. They want to grow or maybe they're tired of doing something. We'd been in that spot. We throw money at a problem. What's your advice to wake up that entrepreneur that may be going down that road?
Jason
It depends on where the entrepreneur is in their life cycle or in their cycle with their businesses. The advice to someone doing $1 million of sales is different than someone doing $5 million or $10 million. The first thing is to be able to grip the mirror and identify exactly where you are. Do you have big investors that are okay putting money into your company so you can grab that market share, do great, do it? If you don't, then you don't have an option. You have to make sure that you're making a profit on the sale.
Dustin
I want to go back to the beginning because people are probably starting to look at what does he sell? What's his website? What is all this? You got started in 2002. You put up a little old website. The first year, $100,000, next year, $1 million and then the following year, $2 million. What are you selling?
Jason
We were selling basketball hoops. We sell basketball hoops, home wreck equipment, foosball tables and hockey tables.
Dustin
Are you a basketballer? Why basketball hoops?
Jason
As a family, my brothers and I, we always played basketball out in the driveway and at the park. I played in high school. We love basketball. We're Laker fans. We grew up in LA. We played basketball and we liked these products. They were fun. We knew a little bit about them. I know enough to be dangerous and we thought we'd sell them.
Dustin
Who has the idea? You've got two other brothers?
Jason
I've got two other brothers. There were four of us. Ari came up with the name SuperDuperHoops.com, which was our first website. It's his idea. He was waiting tables. One of his friends quit his job because he was selling ping pong tables. He was doing this dropship thing where you didn't have to buy the inventory. You threw up a website, drove some cheap pay per click traffic, which was like a nickel a click back in the good old days.
Dustin
That was Overture, the precursor to Yahoo?
Jason
It was great. It was the Wild West. Google AdWords wasn't quite a thing yet and Yahoo ultimately ended up buying them. It was cheap traffic. People were happy to buy online. We had a very ugly website to get with. We've got better over time. Life was good. That first three years we kept growing and growing. We were brand new at this. We didn't have any experience selling things online.
Dustin
Was the psychology of the buyer at that time, were they mailing checks or were you taking payments? Did you do it all?
Jason
We did it all. We would get checks in the mail. We had a credit card processor.
Dustin
Was PayPal big then?
Jason
We didn't accept PayPal at the time. I think it was huge on eBay. We didn't have the ability to do it in our own cart. It was just Visa, MasterCard and American Express. It was the early days. It was fun. I remember about year three going, "This is too easy. I'm missing something here. This doesn't seem right." Don't get me wrong. I'm enjoying it, but I feel like we're missing something here.
Dustin
What do you attribute the growth to? Why do you think you just?
Jason
A rising tide lifts all ships. eCommerce was becoming more acceptable. People were fine putting their credit card. It was the early days. Not everyone was doing it. When we would go in and convince a vendor to sell us pool tables, they say, "No one's ever going to buy a pool table online." We'd pull up our laptop and say, "Really? Because we sold five to them. Do you want to talk again? Let's talk." Those are the early days. Everyone said, "It's for books. It's just for CDs." It's crazy. People buy cars online.
Dustin
You decided to build a website back then, a little trickier to do. You mentioned it wasn't the most beautiful website, but you had eBay and Amazon at the time. Did you think to sell there?
Jason
We struggled to this day selling on eBay. It has always been a challenge for us. I don't know why. Maybe you'll have someone to do an eBay class. I can watch it and learn from that. I've never been able to crack the code. Maybe it's our products that don't do particularly well. I don't know what it is. It was so easy for us to get sales and pay the bills with our own website. We thought we were going to be the next Amazon. We thought we were going to be the next Sports Authority online. That's what we thought we were going to be.
Dustin
When does Amazon enter the picture for you?
Jason
Towards the end of 2003. We're a year and a half in. We have this weekly meeting with my brothers. We go through all the millions of things that we're working on. We're about to leave and go have Shabbos dinner with the family and Ari goes, "I forgot to tell you guys, this isn't a big deal. I know we probably don't want to do this but Amazon called." We were like, "What?" I dropped my notebook, "Amazon called us SuperDuper guys?" He said, "Amazon is going to start their own sports and outdoors category. They want us to sell our hoops on their website." We were like, "Where do we sign?"
Amazon was a bookseller back then. They weren't anything like they are now. It was after the dot-com bubble had burst so they were in less than what they were even a year before. We thought that it was going to be huge early on. They simplified it for us. With eBay, you got listing fees. It's much simpler now on eBay than it was in the past, but it was complicated. You couldn't figure out how to make money doing it. Amazon came in and said, "Here you list your product, here's a flat file, upload it. When it sells, we'll give you your money minus a percentage." It was anywhere from 12% to 15%.
Dustin
You said flat file, what's a flat file?
Jason
It's an Excel spreadsheet. You put all your products in there. You browse your desktop and you upload it. That way our products would get displayed on their website.
Dustin
Amazon already caught fire at that point in certain categories?
Jason
This is a great story. After the dot-com bubble burst, Jeff Bezos flew down to LA to have a meeting with Toys "R" Us because it was bad for them. They almost didn't survive. They convinced Toys "R" Us and several other retailers to let them be their eCommerce platform. They were still struggling then. I remember when Toys "R" Us was selling, it was basically Amazon's platform. They were selling on Amazon. They opened up the market place. We were selling scooters at the time, razor scooters. We launched on Amazon. We were offering it at a lower price than Toys "R" Us.
All of a sudden, we started selling more scooters than we can even count. We were renting a U-Haul truck and driving down to LA to fill up the truck with razor scooters and go back and ship them out to Amazon. We were like, "This is amazing." Shortly after that, maybe a month or two, I think Toys "R" Us started to see their sales come down. All of a sudden, we weren't allowed to sell scooters online anymore. There was a huge legal battle when Toys "R" Us finally pulled up chocks and said, “We're not going sell.” They got a quarter to let them do it. Everyone thought Amazon was going to go out of business. We were sitting there going, "No, they're not," because they're going to find millions of folks like us to sell the product. They are going to crush it. I wish I had enough cash left over to buy the stock back then.
Dustin
My thought process initially was you’ve got your own website, maybe click costs are rising a little bit so as your profits because naturally, that's what happens. My thought process would be like not to sell on Amazon, especially with that scenario. The ship is going down. My thought process is that way because there's now a middleman. Why was it different for you?
Jason
That's what my brother, Ari, thought. He thought this was a bad idea. They're going to kill our business. They're going to learn about our products. They'll go directly to our vendors. All of that happened. From my perspective, Amazon had a lot more eyeballs on it than SuperDuperHoops.com. They were an enormous marketplace. I wanted to get our products in front of their customers. I also wanted to learn their processes so that we could borrow those processes and put them into our business to become successful. Both of those things happened. We're not selling the same stuff now that we were back then. We've changed it. We're doing our own private brand now. It seemed like a no-brainer to me at the time to sell and that Amazon was going to be enormous.
Dustin
I want to definitely get back into this and how people can start selling on Amazon and get more into the Wild West. I saw on your résumé, you’ve got a business degree coming out of school and then you joined the Marines. Usually, you joined the Marines, you get out and then you go get a business degree. Why did you decide to go to the Marines?
Jason
I was walking around campus at Cal State Northridge where I got my business degree. I walked by this recruiting booth. On the cover of Inc. magazine was a Marine in dress blues. The title said, "Best Business Management Program in the world." I picked it up. I read it. I walked right down to the recruiter and said, "This is interesting to me. Tell me more." I finished my degree. In the Marine Corps, when you have your college degree, you can go to this program called Officer Candidate School. You can go in instead of as a private, you can go in as a second lieutenant. I got excited. I was very hyperactive. I had a lot of energy back then. I wasn't ready to sit on a desk. I wanted to get out there and get muddy. I knew I always wanted to be in business. I wanted to take that opportunity to learn from some of the best managers in the world and ultimately take that into the business world.
Dustin
What did you take? I wouldn't have thought that. That's very interesting. What did you glean? What did you take away from your time there in terms of management
Jason
There are so many. I'll narrow it down to two of my favorites. Number one, when you go and you survive because that's all you do. When you survive Officer Candidate School in the Marine Corps, you learn that your boundaries for what you think you can accomplish are much greater than what you originally thought. They push you beyond. I didn't sleep for a week during one training or so I was talking to a tree. They push you beyond so you gain a lot of confidence. Another gem that I took from the Marines was lead from the front. Don't ever expect your people to do something that you are not willing to do yourself. The third one is they always would say, especially as an officer, “Always have a plan but never fall in love with your plan,” because the minute you cross the line of departure, your plan goes to a bad word. It's Marines. They've got this a lot. That was interesting to me. It's stuck with me. I use it to this day. We always have a plan, but when things go awry, don't worry, improvise, adapt, overcome. That's what we've done with Dazadi. That's what you have to do in order to survive in eCommerce and as an Amazon seller in the marketplace.
Dustin
Most certainly as an entrepreneur, you’ve got to innovate. You've got to be thinking constantly. Let's go back to now eCom and Amazon. Will you share what the real opportunity is because you got in early and so some people could be sitting on the side saying, "I've missed that one or I've missed that opportunity." Share some numbers. Share how many people, if you know, are getting into the biz. What's the opportunity?
Jason
There are millions of Amazon sellers. Literally five million at last count, back in 2017 that count came through. The interesting thing is there are only 140,000 of them doing $100,000 in revenue annually. There are a lot of sellers out there that start an account, don't have success and give up. About 140,000 are doing a decent business. If you want to stay at home and work for yourself, you can make money doing that. There's an even smaller number. I don't know if it was Amazon or one of the research firms told us we are a top 200 seller. I don't know if that's true or not.
I know we're doing a lot on Amazon. It's a big part of our business. You have to go beyond and you have to have a team. You have to be able to do many different things in order to succeed. You don't put it up there and just hope for the best. It's an active approach. We've got a whole team of folks both here in the United States and in the Philippines that are doing a lot of stuff under the hood helping us to succeed. There have been some windows that I believe have closed as it relates to becoming an Amazon seller. We started the business as a dropshipper. It was great.
Dustin
Explain dropshipping.
Jason
You enter into a relationship with a manufacturer or an importer who has inventory in their warehouse. You enter into a relationship to have them let you sell their product on your website. When you get the order, you don't go into your warehouse to fulfill it, you send it to them. It's email, sometimes telephone, EDI, whatever. You send them the order. They take that inventory directly from their warehouse and ship it to the customer. That's how we grew so fast without a lot of infrastructures. We would keep adding products. We'd go to these shows and say, "Will you let us dropship?" Before you know it, we had 30,000, 40,000 SKUs.
Dustin
Is there any resistance from these manufacturers to not dropship? Why would that be? Why not have an army of a million affiliates or a million dropshippers?
Jason
It's about protecting your brand. Someone who's not trying to do things above board can hurt the integrity of your brand. Frankly, a buyer for a manufacturer who is selling to a big retailer doesn't want to hear from that buyer, "Why are you selling to these guys? Why are these guys selling it for cheaper than I am? I'm going to stop buying from you." They don't want to lose those big customers. It gets a little complicated from there. That's how we grew the business. It was great. It was a challenge. That's why that window has closed. I don't think that you can succeed as a dropshipper selling on Amazon.com especially anymore.
Dustin
That's a big bold statement across all categories?
Jason
It's because of order metrics.
Dustin
What do you mean by that?
Jason
Amazon measures when you shipped late, when you shipped the wrong item, when you cancel the order before it ships because you thought you had stock, but then you don't. Those are all important metrics now. If all of those metrics aren't well below their minimum and they're not in the green, you are going to get eaten alive. You're not going to get the good real estate. You're going to have competitors that would come in and take away all of your buy box shares. It's hard to do. That window is closed, “Are there people that are dropshipping out there?” “Yeah, but they're not doing as well I think as they could be doing.” If you look at our business now, 500 SKUs. Our revenue per SKU is huge compared to what it used to be where it was minuscule number per SKU back in the day. We'd like to do that because now we build our own product. That's the window that's open right now on Amazon.
Dustin
If I'm tracking correctly, there's something else in there. That's a private label or is that part of building your own products?
Jason
We call it internally exclusive products. You can go to a vendor, a brand and say, "I love your product. I want you to change this product from happy to glad. Give me my own UPC code so that it's mine and you can't sell this to anyone else. I'm going to buy four containers, five containers, one container a year, but you can't sell it to anyone else." That way you're not in the buy box on Amazon, sharing it with 50 other sellers that are doing one thing, squeezing out your profits. If you're selling the exact same item as I am, the only way that I can win is by lowering my price. You can offer better service, but when it gets to be 100, 200, it's ridiculous. That is one way you can sell other people's brands. If you can have the juice and the power to get them to sell exclusively for you, you can do it. The best game in town is developing your own brand and your own product.
Dustin
People are excited. They're like, "I want to get in this game." Where do we start? If we can't dropship, if we're going to eliminate that as an option, where do you recommend someone start?
Jason
You start with one product.
Dustin
How do you find that one?
Jason
I give all of those good tools away in the class. Number one, I'll show exactly where to go on the Amazon.com website to find the bestselling products on Amazon for every category, every subcategory. It's incredible business intelligent. Several years ago, big retailers and big manufacturers would have to pay a fortune to get that data. Now, it's all available for free on Amazon. Anyone can get it and I'll show you how. The next thing you do is you want to find out what's the market, how much in revenue is this product that I might be interested in selling and doing? If we're going to put a lot of time and energy and that's what it takes to develop a private label product, one product, it takes a lot of energy. If you're going to put a lot of time, money and investment, you better make sure that you're going to sell it in a market where it's getting enough revenue to pay off your costs or to make it worth your while.
Dustin
Traditional thinking, which may be my thinking is, "That's a hot market, but I'm scared because someone's already dominating that category." That's bad thinking because you want to run to where things are being sold if you want to be in that same.
Jason
One of the examples we use in the class is water bottles. In the water bottle subcategory, there's Hydroflask. There's Camelbak. There are all these huge brand names. They're doing big volumes. Some of them are doing $800,000 a month with one SKU. Top six bestselling is a brand that I've never heard of and you've probably never heard of. They're doing six figures a month because they know how to use the Amazon game. They know how to listen to customers, iterate on their product and improve it continually and sell it the right price and get the right eyeballs on it to win. It's very possible to do it.
Dustin
We find the product, how do we source it now at this point?
Jason
There are a million YouTube videos out there that are going to tell you, "Go to Alibaba." Forget Alibaba. You don't know who you're buying from. You're almost guaranteed the quality is going to be horrendous. I never sourced a product from Alibaba and neither should anybody else in my opinion. There are some software systems out there. Panjiva is one of them and a couple of others that are out there where they aggregate customs data for products from address and to address for products coming in through the customs border. Coming via ocean or via air.
These systems will tell you if you want to build a water bottle, you go to Panjiva. You type in a water bottle and you will see a list of all of the factories that are importing into the United States from all over the world. Most of them are coming from Asia. That has been the best way, in my opinion, to find a good factory. Find somebody who is already manufacturing a product, who is already selling into the United States because the bar is high to make a US customer happy. If that factory is already selling into the United States, the likelihood is they're already hearing from their customer about it needs to be better. That's a good start. You don't want to start with a brand-new factory who doesn't know that because it's painful.
Dustin
It seems like this is a slippery topic. I've heard horror stories of people trying to get stuff from China.
Jason
That's how I started. I stumbled on this idea. I was talking to our customs broker. I was like, "There's got to be somewhere where it's public information where they're telling us where this stuff is coming from." He says, "It's funny you should say that." There's this company. I don't remember what it was at the time. It wasn't Panjiva. It was another one. That's how we started finding good factories for our categories. It was amazing. We've found factories that are making a product for our competitors, products that we maybe never even thought of that are coming to the United States. We started to build our product SKU count that way. You use that customs data.
Dustin
You've got all this intel, you find a product and you get it. You list it up on Amazon, how does this fulfillment? We've heard this Fulfillment By Amazon. Do I need to buy a warehouse? Does Amazon do it? Break that down for us.
Jason
If you're starting out, I highly recommend staying with something with a small package footprint. Small package items, something that can be delivered on a UPS truck or van. We sell a lot of pool tables and they don't go that way. We're doing what's called FBM, Fulfilled By Merchant. We outsource our warehousing in multiple locations. We place our inventory strategically so we can deliver it fast. That's for big bulky items. Fulfillment By Amazon is not yet moving that big stuff. I suspect they will because they see it as a growth opportunity. I think it's under 70 pounds. If you've got an item that's twenty pounds or less, it's cost effective to let Amazon be your warehouse.
When you go from selling one product and you use the methods that we share in our class to selling five products, 50, 100, 1,000 a month, Amazon's FBA will scale with you. Trust me, shipping out of your garage, overrated. It's not sustainable. I would use FBA. It's a great way. The other benefit of FBA, Amazon was so smart and my buddy, James Thomson, launched this program for Amazon FBA. They give you the Prime badge so the customers are guaranteed they're going to get their item in two days for free. That Prime badge gives you a nice big lift and quantity sold sometimes as much as 30% or more. I said it before. I never knew I needed three, two-day shipping. I can't live without it. You get that Prime badge when you use FBA.
Dustin
What do you think the future for eCom is?
Jason
Voice and video are the future of retail. We were joking with the folks when we were running the class that Bezos is working on how to beam products directly into the customer's home. If we want to get crazy, that'll happen someday.
Dustin
The 3D printing.
Jason
The 3D printing is fascinating. It can go in so many different ways. I do know this, whether it's 10 years, 20 years or 30 years from now, people are going to be buying products. They want it fast, easy with as little friction as possible. We'll see all kinds of interesting creative things in the next 10, 20, 30 years that will blow our mind.
Dustin
Are you excited with eCom? Have you gone and thought about retailers or is there a reason if you haven't gone that route?
Jason
There was a big divergence between selling eCommerce and selling brick and mortar. The lines are getting blurred. Even folks that have big brick and mortar are trying to figure out eCommerce. Let's face it, brick and mortar have had a rough go at it the last few years. Do I think that there's a place for retail? Absolutely. Amazon is at the forefront of this. Their Amazon Go stores, they're amazing. You turn your app on. You walk in. You grab your stuff. You walk out. Your phone automatically gets charged. That's the shopping experience I want and I won’t have to go into a brick and mortar store. I don't like standing in line. I'm not interested in the chitchat behind the counter with a checkout person. Give me my stuff so I can go and charge my credit card. Amazon is going to be at the forefront. I don't think brick and mortar is going away. It's going to evolve. It's going to be cool to see.
Dustin
I was going to put in there that Amazon is now going in reverse of what other people are doing. They're opening retail stores. Do you think that's more to test out their idea? They're like little laboratories for them.
Jason
Amazon grew at 30% in 2018 or more. They're addicted to that growth. Their investors are addicted to that growth. They've got to keep that growth going. The fascinating stat is eCommerce is still depending on who you talk to, anywhere from 10% to 15% of total sales. eCommerce is a small cut of all that brick and mortar. Mr. Bezos is probably looking at that brick and mortar market share and saying, "I can do that. I can continue this growth. I can do it better than anyone ever has." He's not the only one. There are a lot of folks out there that are innovating in that brick and mortar retail space. We never had the resources to do it. Frankly, it's a lot more fun to sell online. I have to manage stores so we stayed away from it.
Dustin
Jason, you've got raising capital in your background. A lot of folks would be interested to know, did you raise money to start the business?
Jason
We did not. We bootstrapped this thing for a long time.
Dustin
I wanted to put that in there because a lot of people think they can't start a business without when in fact you can. You do have that in your background. For those that are pursuing it or maybe they have a business and they're not able to scale it because they need that capital. What's your advice or tips in that area?
Jason
I learned a lot especially in the last five years. We secured an initial round from an Angel investor group. It's a great group of guys in Los Angeles that gave us some investor capital. We took that capital and we tripled the size of the company.
Dustin
You knew you needed that capital to get to where you want it to go. Did you map that out pro forma?
Jason
Especially with this new business model, remember we were a dropshipper. All we had to do to raise money is to sell more stuff because we didn't have to buy it ahead of time in order to sell it. We put it up there. It's sold. We paid for it 30 days after it shipped. Under that model that used to work great and doesn't anymore. We didn't need capital, but as soon as we started to buy inventory, as soon as we started to buy our own brands and products and bring them in, our cash needs increased greatly. We had to go out and get investor capital. We got a great group of folks that help us. I've learned a lot because we're out to market looking for a next round. We've talked to private equity firms. I have learned that private equity firms are not all the same. There are many different kinds of private equity firms. If you have a business that is growing rapidly at double-digit, you've got your own brand. You've got marketplace master, but also you can drive traffic to your own site. You don't even have to be profitable. The type of investor you're looking for is a growth private equity investor.
Dustin
Why is that?
Jason
Because those guys are somewhere in between venture capitalists, which are looking for the next cure for cancer and guys who recognize that someone's got an existing business, it's growing rapidly. They've proven the model and now they needed a little fuel in the tank to take it to the next level. There are even bottom feeder private equity groups. We made the mistake of going down the road with some bottom feeders. They're looking for a profitable company. They're not looking to put a large amount of capital to grow at the high rates. They're focused on profits.
In my opinion, some of those private equity firms are looking in the rearview mirror too much instead of in front. The growth equity private equity folks or Venture capital, if you've got something special is the way to go. There are investment bankers out there that you can hire that can get you in front. They're fancy real estate agents, like selling a house, you hire an agent. They find the buyers. Investment bankers can make those connections. I'll be in LA. We're talking to a new investment banker to potentially go out and raise additional capital for the business.
Dustin
What's your thought process in terms of valuation? Because you hear a lot of entrepreneurs think they have something a lot more than maybe what somebody wants to give you money for. What's your thought about that in terms of how you value your company?
Jason
There's a wide spectrum. If you're in a mature industry and you're making profits, most of those investors are going to look at a multiple of EBITDA, Earnings Before Interest, Taxes, Depreciation and Amortization. That's what they're looking at. If you're a fast-growing, you can get a multiple of three, four, seven times your bottom line. That's never been something that I've been interested in because we're in a fast growing area. The growth equity firms are looking for companies that are growing at double-digit, 30%, 40%. They don't even have to be making money. They don't want to be losing a lot of money, but they don't even have to be making money. Those kinds of companies can get valuations, a multiple of the top line revenue. Those are the things that are interesting to me because then you're bringing in the capital that takes your business to the next level. There are minuscule variations in between and outside of that spectrum, but it's a wide spectrum depending on what your business is like.
Dustin
I wanted to ask you about what's your mindset around how much one gives up? You and the crew have built this company. This is a baby. You obviously don't want to give it all away. What's your thought in terms of how you have that conversation?
Jason
Give up as little as possible. Giving up equity is the most expensive capital that you can buy because you're giving away your future interest or a portion of your future interest in this business. If you can use debt, great, use it. Use as much debt as you can, if you can still be profitable. You want to give up as little as you can, but depending on the size of that check that an investor is willing to cut for you, you might be willing to give up more than you wanted to originally if the check adds another zero maybe. There are a lot of different variations with that as well. It depends on the deal of the company, the industry that you're in. Frankly, valuation in my mind is in the eye of the beholder. Dumb money isn't so bad sometimes.
Dustin
A couple of years ago, you started helping other Amazon sellers.
Jason
I did accidentally.
Dustin
How did this happen?
Jason
The Prosper Show is one of my favorites. It's the best Amazon seller show out there is the Prosper Show run by my friend, James Thomson. I did some speaking engagements at that show. I've spoken at the Internet Retailer. I don't know if you've been to these things. After somebody speaks, usually, there's a mob that comes up. We've suffered a lot. We've made a lot of dumb mistakes and learned from them and improved from them. My heart goes out to entrepreneurs when they're suffering and I know the answer. I found that it was very meaningful for me to be able to help these folks. Unofficially for several years, I pick up the phone, I’m like, “How are you doing? Try this. You're having this problem, try that.” It's something that I enjoyed. I decided as early as this year that I wanted to do more of that. I've had Dazadi on my shoulders for several years. I'm ready for something new. That's why I launched Avenue7Media as a full-service company to help other people succeed on Amazon. Eventually, we'll offer some other services beyond Amazon, but we're going to start with Amazon because there's so much opportunity there right now.
Dustin
What surprised you in helping others? It's one thing to see your world and master that, but now to advise and look into other niches and worlds.
Jason
I'm sure you've run into this. When you're an expert at something, it's sometimes shocking how little somebody else knows about your subject. It's meaningful. I didn't realize I enjoyed doing it as much as I do. I love the look on somebody's face when they see some positive results or when I can help solve a problem of theirs. It's something that I learned maybe years ago. I was afraid of the idea of having clients because I'm like, "I don't want clients. I've already got a lot of customers. I don't want to deal with clients too." I don't want to say we're developing friendships, but it feels that way. It's almost like when it works, when we click with an owner, it works well. I found it incredibly meaningful.
Dustin
What's been the most unique product, if you can say that you've had to help someone else or even yourself maybe have marketed and maybe no longer?
Jason
We've sold some adult toy products that are interesting. It is allowed. It's hard to find because I don't think Amazon wants to announce. They do big business selling adult toys on Amazon.com. In fact, when I was looking at the bestsellers rank, remember I was telling you where to look to find what's selling really well. Accidentally, an adult product ended up as a top seller in the ping pong table category, so that happens sometimes. I'm sure someone at the Amazon got scolded for that. It came down pretty quickly. Sometimes there are some problems.
Dustin
Jason, I want to move us into what we call WealthFit Round, which essentially is rapid fire. I'm curious to know ever in your life, what's your most worthwhile investment?
Jason
Dazadi has easily been my most worthwhile. It's the one that I put the most into both financially and sweat equity into. I'm still waiting for that big payoff, but we're getting closer.
Dustin
What's that investment you don't want to talk about? What's that misstep you made earlier in life?
Jason
I can't believe I didn't buy Amazon stock when Toys "R" Us left. It was $5 a share. Can you imagine what $100 of those shares will be worth right now? I'm really kicking myself. Literally, to build this business, we put every penny we had back into the business. When we make money, we put back into the business to grow. That's my biggest regret.
Dustin
When life is good, you're winning and business is going well, what's your splurge? What's that guilty spending for you that you do?
Jason
I have two daughters now, seven and five. I've spoiled them. Experiences, my wife and I, we love to travel. We drag our little ones all over the place.
Dustin
What's been a place you've been to most recently?
Jason
We relocated to the East Coast, so we've been doing New York City. It's a train ride, which is exciting for the girls. It's not a big one. This summer we're going to do Paris. We're going to let the girls experience a country with a different language than English. We like to do this.
Dustin
Did you do in New York at Christmas time?
Jason
We did it in between Christmas and New Year's. We got out of there before the New Year's rush. We stayed at Times Square. The girls did the Trolls experience and the Rock Cats, some of those fun things. That's what gives me joy now.
Dustin
In the last few years, what have you become better at saying no to? It's a tough one for entrepreneurs.
Jason
I have a hard time saying no. I get a hundred emails a day from someone that has new software to help me with my Amazon business or something like that. I finally started sending those to the junk folder because I feel for these folks because they know they have good intentions and they've probably got a good product, but I don't need it. It drains so much of my time, my inbox.
Dustin
Fear and self-doubt prevent a lot of people from acting on an idea and placing an investment. What do you do to overcome fear and self-doubt when you feel that?
Jason
I find fear to be incredibly motivating. I love doing things that terrify me. Starting this new business venture, for example, it's absolutely terrifying. Looking in the near future to stepping down from a company that I've run for several years, I know you recently went through something similar, that's terrifying. I have these "oh no" moments throughout the day. I like that. Maybe it's because I joined the Marines. There were things in the Marines fast-roping out of a helicopter that scared the hell out of me. I got used to that feeling. I liked it. Fear is motivating to me. Fear of failure is motivating to me. That's not to say that I won't push the limits knowing that failure could be a possibility, but it sharpens my focus.
Dustin
What do you say to somebody, maybe a client or someone you're trying to motivate and you see the fear in them or that self-doubt? What do you advise them?
Jason
Fear is normal. If you weren't feeling fear, I would advise them, then there's something wrong with you. This is a good thing. You've got this fear. Let's use that energy. Let's channel it again to focus on what's important so that fear of failure can be overcome. Celebrate those failures. As long as you're learning from them. It's not a failure. Failure is not final.
Dustin
You mentioned channeling and so that got in my head. Do you have any rituals or routines that you do to make sure you show up in the world great?
Jason
I meditate. I do transcendental meditation every morning. I don't know how I lived without it.
Dustin
Are you doing twice a day or is it just in the morning?
Jason
I try to do twice a day. It's mostly at 5:00 in the morning. I’ve got two little kids and two businesses. You know how that goes. It helps energize me and keep me focused on what's important.
Dustin
Who do you learn from?
Jason
You and I have a mutual friend, Rick Cesari. I will sit at his feet as long as he'll let me and learn everything that man has to offer. I learned from him. James Thomson, another good friend of mine. I learned from him constantly. We learn from each other. I read books. Those are two of my favorite people.
Dustin
I came from Direct Response. That's your world. I love his book, Rick's book, Buy Now. It's phenomenal.
Jason
He's got another one. It's just came out with Barb Westfield, who's also brilliant. I learn from her as well. Rick and I, we both spoke, he was the keynote and I was the last speaker. I was living in Seattle at the time, so we started having Friday coffees together. In conversations with him and how he helped companies like the George Foreman Grill become famous, the process that he used was very similar to the process that I share in the class. We're listening to product reviews and reading product reviews and finding out what's wrong and fixing those problems when we introduce our product to the market.
He did the same thing. If you ask him, he would find these companies that had a small customer base that he could go out. He would interview them for testimonials and video those testimonials. He would use them in the direct TV campaigns. Through that process, he would find out what was wrong with the product. He'd ask what the customer like and what they didn't like. He'd take that back to the vendor and say, "If you tweak it here and there, you may have $1 billion product." His success speaks for himself. It's very fun to have those conversations with him. It's amazing how the core process that he used is similar to what we do to have successful Amazon products.
Dustin
I'm excited you're creating a course here at WealthFit. You mentioned a couple of companies and the new things that you're up to. For those that want to continue the conversation, check out the WealthFit course. Keep tabs with what you're up to. How can best people do that?
Jason
We click a button. If you need help with your Amazon business, I'm available. You can click the button from the course. I'm on Twitter. I love Twitter. I'm not sure why because I sometimes get lost and can't believe some of the things I see on it and you can email me, Jason@Avenue7Media.com.
Dustin
Thanks for being on the show.
Jason
Thanks for having me.
Dustin
Thank you. We're so excited to have this as part of our platform. If you want to change your path in life and start selling on Amazon or online, then definitely check out Jason's course.

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