He Grew His Ecommerce Brand 120% By Doing Less Stuff (With Sam Mendelsohn) transcript

Sam Mendelson is doing so much in e-commerce and I'm going to tell you all about it right now. He's the co-founder of Workspace 6, a community for seven, eight, and nine figure e-commerce operators. That's not really the main point of this conversation, though. We'll get there a little bit. He's also the co-founder of three e-commerce brands doing a combined $12 million in revenue at a 7% bottom line profit. I say those numbers so you can have a sense of the context of his business.

He also is the co-founder of Box Fort, a 3PL servicing fashion and apparel brands. There's a lot of different ways that Sam is touching the e-commerce industry right now. And I'm particularly interested in talking to Sam about some things he has told me recently about how being so involved so deeply in the e-commerce community has helped his business get profitable and not just like eating out a profit, but growing, moving the right way, focusing on the right things.

There's a lot here for brands in a lot of different spaces and you're going to like this conversation a lot with one of my friends in the space, Sam Mendelson. Let's get into it. Dude, you are doing way more than I even knew in the space. I I knew about some of the businesses, but I didn't realize how much e-commerce you were doing. Do you do you ever not work? I I feel like I'm working way too much. I'm trying to cut back a little bit now, more recently.

But I feel like it's also part of it is like the experience of being in e-commerce. Like a lot of people on Twitter that you talk to or kind of who you follow, a lot of I feel like have had rocket ship growth. I feel like me and my brother with e-commerce didn't have that. We got in early, but we were too young and dumb to really capitalize on what I think we could have. Like especially getting into Facebook ads like 2015.

So like we for us specifically, we plateaued and I I will like self admit that I don't know if our brands have incredible product market fit. So like I don't know like the potential TAM or the ability for them to scale. A lot of the brand a lot of the brands on Twitter when you're talking to them are seeing them you're seeing them after they've either a hit on pro a product market fit vein that sometimes even the operators in the companies don't even know they had or b they basically are already past that part in their journey for us like anyway back to your original question I feel like we do a lot of because it's like nothing was working so or like nothing was working to the level we wanted so it was constantly like okay we can't scale vertically so let's keep on scaling horizontally now Now that we kind of I feel like we got things a bit more dialed.

I think now it makes more sense to kind of call maybe callull it down at some point in the next couple years. But that's kind of why it was just more more than should be happening ideally. Yeah. Yeah. It's not I think it's not a terrible approach to like put your hand in a few places, see where you think the biggest opportunities are, and then go push in harder on those. I I mean seems reasonable to me at stages as long as the cost of doing the thing isn't too high.

Especially if you're uncertain about product market fit and you're you're not like this is the opportunity I definitely want to put everything into. It seems reasonable to me. I think people do this all the time. I was thinking about that cuz I know you talk a lot about launching creative like a ton of creative and whatnot and the ad counts and like obviously you're giving every like ad an opportunity uh to scale to like get spend and whatever.

I was thinking about that recently of like at least for us what one thing that's helped this year for one of our brands was starting to look at that not on a creative level but on a product level. So like certain products have a certain avail amount of available in market demand and if we can only capture a certain amount and let's say the product's not scaling what happens if we like triple the amount of new products we're launching to basically increase the kind of like horizontal scale of our inmarket demand from launching let's say like not saying socks but let's say like sweater for us in apparel it's like sweaters you know like dresses like there's a different type of persona for each one taking that further that's kind of what we did brands as we scale we ended up basically like oh there's a upper threshold we're hitting here for whatever reason let's just launch another brand like I I don't think that's crazy at all I I mean in fact I think the product thing that you're talking about especially in fashion apparel is the game I mean the product thing is like how much how much product can you release and how much can you create moments for a business like that is really crucial and the notion of like as long as you aren't giving such short shrift to one of the opportunities that you're missing out on the opportunity which is always the danger Um, then I think that's the case.

But I mean, you told me before we started recording that you maybe think your 3PL is the best business of all of those. And I think that's sort of interesting. Yeah, I think well it's like I got to say it's it's very consistent. It's like it's also I I me and my brother talk about it feels like honest work so to speak. I imagine I imagine owning an agency would be similar where it's like when with uh with e-commerce brands like a lot of times when you're hitting a problem it's like soft issues.

You don't know what the problem is. It's like why why is this like particular product not working now when we were able to sell like a thousand units a month, you know, last month or last year at the same time. It's like there's just like no there's such ambiguity on what's the problem is and you just it's like it feels like you're kind of just constantly just testing and like like I saw Taylor Holiday posted something about this of how much running a brand is just constantly vibing or a lot of people's decision-m is just vibing everything.

I'm like I was like I hate that and I was like that's pretty damn true. But like in the three in the 3PL business, it's like you get an order, you ship it. It's like if you didn't ship it in fast enough, that's the obvious problem you're doing. You know what I mean? Um but yeah, it just makes it a lot easier, a lot more consistent, and it's just like a more honest business, so to speak. Um not honest, but you know what I mean?

Yeah. Yeah, I know what you mean. Yeah, I definitely know what you mean. Well, one one of the things I'm I'm really interested in is sort of hearing you talk about the reason I I wanted to have you on is that you had said to me separately in the DMs where a lot of our conversation has lived over the years. Um you you had said to me separately that um you felt like uh your e-commerce businesses had made a turn to becoming better businesses with better potential uh bottomline margin. they were sort of moving in a way that was meaningfully better overall and that there were some things that you could um that you could point to that were the causes of that and and that was really interesting to me cuz because you know you you was sort of like and that's sort of obvious in one respect but but also like it seemed to me that you had you had seen a sort of a turning point in those businesses at some point. you described it a second ago to me as as being a member of the of the community.

Um, but I'm curious if we can just kind of dig in a little bit more like, you know, you said they're bootstrapped, they had to be profitable from the beginning, but what has made them better, you know, at a at a more of a bottom line and maybe moving towards some more growth and bottom line uh going forward? Yeah, I think the biggest well to to add some context to this back to like talking about my background and the multiple brands we run.

Um we launched our brand in 2011, Savana. Um and that was like it the reason we launched it. I think we were the 200th store on Shopify at the time. Um there's there's only 16 people working at Shopify when we first started. So like we're very early days. the kind of story like I'll try and go as quickly as possible through our background story. But essentially my dad had an online business years ago. I think he started in like early 2004 or something like that.

Back before there was like Shopify. It was like back in the day where there's like no such thing as Google Analytics. There was like nothing. You just run Google AdWords. You made money. And I think things were probably more simple but obviously less data back then. Anyway, point being is that he b he had a bunch of inventory. he retired and he just let he turned off all of his advertising in the 2008 market crash. Um, and he was just selling like one order basically a week at that point.

Uh, just shipping it out of his garage. Come fast forward to 2011, we uh, he still had a garage full of junk that he needed to sell. And he's like, "Hey, let's like boot up a website. If you guys want to sell it, we'll just split the money and like, you know, sell it off. I think it's $50,000 worth of inventory, you know." And me and my brother being really young at the time were like, "Oh, sick." you know, like 5 10 grand in our pocket.

Let's do this. Um, so we launched my brother who is background in web design, he uh he launched our website on Shopify, got going and then pretty much like I'll I'll shorten the story, but essentially kept going, found Facebook ads, and it became our full-time gig. We basically we scaled our brand up to about two maybe 3 million at the time. Um, looking back now on the amount of money we were spending on just dumb stuff, like chasing every new Shopify app, every new like, you know, service, hiring like every single agency we could find for every single channel we could imagine, like just doing everything all at once was pretty much like our angle.

And I remember distinctly in 2014 or 2015 turning our Facebook ads down because we went from a seven rorowaz to a five, which this is before you guys essentially invented the myrr the myrr term. I have I have uh I have that same story when I was at Kayla where like hammer hammering out these arguments between $8 CS and $10 CS on uh on a $30 revenue at like 90 points of margin or something like that. Yeah, you're just like, "Turn up the machine.

Please go go spend forever. That's what we should have been doing, you know." By the way, I appreciate uh the allocation of of of the invention of Myrr to me. I can't take credit for me. I think Taylor got that from somewhere. But a little known fact is that Ame actually did come from me. And I I don't Yeah, I don't uh Yeah, it's like it's actually my greatest accomplishment in the world. I don't um I don't ever take credit for this, but because you brought it up, uh it was a conversation with Taylor and we were like obviously plenty of people thought about the idea of blended rorowass and some of that kind of stuff, but the the specifically the designation am acquisition me with the lowercase A, which is an important part of it, came from me and Taylor being really into baseball and there's some baseball stats that are have acronyms of lower and uppercase together.

So anyway, anyway, I'm happy to take I'm happy to take the V victory lap on you. you should because that's a great metric one me is a great metric and a me is even better but uh yeah it's funny we anyway so I'll finish the story but I to yeah sorry it's not to derail but it's funny cuz we had talked about for years and at that time we basically were like 25% of our company's revenue has to be spent on advertising and that's we always just refer to it as the 25% the 25% 25% and we didn't look at like acquisition or whatever and it's funny that it wasn't until years later I think is I feel like you guys invented that around maybe 17 through 19 I don't remember somewhere around then I remember hearing that word coming from you guys and I was like that's the number 25% that's the number like that's right anyway um anyway so fast forward we basically we we were turning our Facebook uh ad spend down in 2015 because we went from a seven to a five which is like it just it feels like thinking about Bitcoin now to be honest but anyway like and like I remember we were we were shifting from agency to agency they weren't working they weren't good enough like whatever blah blah blah Um it's yeah it's crazy to think about when you kind of reminisce but anyway point is is that clearly we just didn't know what we were doing.

We we're too young industry may have been too young. We didn't have all the knowledge and we're not we weren't me and my brother weren't really adults yet. We we stalled out at about 2 to 3 million and we basically coasted there almost until I think 2019. Um which finally pretty much out of like semi boredom slash uh just being frustrated. Um me and my brother la we took one of our top top uh performing categories a jew like a jewelry line we had on our on our site and launched that as a separate brand tiny rituals and then me and my wife at the time also were talking about launching another brand she wanted to create an underwear company so I was like hey let's do it create an underwear company um the product was incredibly unpopular and we immediately pivoted over to dress we immediately pivoted over to dresses and then that did well co happened I'm trying I'm losing train of thought of when why we pulled into this uh specific topic.

Um but oh yeah I was asking about the pivot into into real profitability and what had happened to do that describing before and after launching launching these new brands and around the same time we got basically kind of a big lift from co. So that kind of like that immediately juiced our revenue. It juiced all of our brands kind of jumped up and then right after co like the halo effect co collapsed. We saw all of our brands were starting to kind of collapse down at that point is about the same time that I launched Workspace 6 as well as uh with Philip and Danny and then our community and then also got really way more active on social media.

And I just basically think like there's a lot of little points that I feel like to helped us to start scaling again which specifically happened the past two years primarily is absorbing so much information from Twitter and LinkedIn realizing that like there's no one there's no silver bullet and two I remember there's a lot of things especially you and Taylor Holiday have said that has resonated really well with me. One of them being with Taylor was I remember one time he wrote on a Twitter thread basically said you know it's not hard to do buy something online and like all these gimmicks all these like apps all these services all these different things you can be doing realistically at the end of the day it's really easy to buy something online if someone wants it and I was like damn yeah that's true like you don't ne like the is the loyalty points app that you just spent you know a month of your mental energy downloading and uninstalling maybe it's a really big benefit for your brand, but maybe it's not.

Maybe at the end of the day, the person just wants a product at a right price point, you know, and they want some kind of creative that essentially inspires them to want that product or like builds that demand. So anyway, uh yeah, I think the biggest takeaway was just it wasn't one thing. It was just basically absorbing all this information, just realizing that like we were doing way too much. We were focusing on way too many things and at the end of the day, it really just matters as creative.

You know, it's kind of unsexy. And to be honest, the the businesses have gotten more boring to operate more recently. Um, but it basically all comes down to a creative is your site usable, like userfriendly, you know, is are you optimizing it? And how is the product? Is the product good? When people get it, do they want to buy more of it, you know, and uh are you advertising the products that people actually do like buying more of stuff like that?

Um, I know that's kind of a I have a tendency to ramble. I am so happy to have Workspace 6 as a sponsor of this show. That is not actually the genesis for me having Sam on this episode. Sam was going to come either way because we were talking about the way that he has been able to move his businesses towards more profitability, more growth by focusing on the right things. And when you talk to Sam about how that happened, he says the crucial lever lever and as he said in this conversation, one of one of the crucial levers was hearing from other people in the community, watching what was happening, learning from them.

And a lot of that has happened in the context of Workspace 6, the community he has built for 7, 8, and 9 figure e-commerce executives and operators. Um, folks who are running good quality e-commerce businesses and who are ready to talk about it. And in Workspace 6, which is primarily a Slack-based community, there there uh there are over 900 members of the store who are sharing information, sharing insights along their journey so you can learn what is good and what is not.

And one thing I love is when I asked Sam, hey, um but before uh I accepted their sponsorship dollars for this show, I said, "Hey, can I go into Workspace 6, check it out for myself, etc." He said no. And he said no, not because he doesn't like me, but because service providers and software companies are not allowed in there. So you can be in with other e-commerce actual store operators and talk in real honest terms without, you know, hurting anybody's feelings or worrying about those kinds of things about evaluating service providers, software providers.

In fact, multiple of my clients are in Workspace 6 potentially saying bad things about me. And if they are, that's fine. They need a place to be able to say that and to be able to uh voice those concerns honestly without me looking over the shoulder. I think it's good for them. I think it's good for you as well. I love what these guys bring to the table. It's also really affordable. $1 for your first month. After that, $99 a month.

And there is no minimum commitment length. So you can leave any time if you're no longer seeing the value, which is hard to imagine because uh that's just not that much money to be able to evaluate things that can easily move the needle in your business and push you in the right direction. Workspace 6.io is the place to do it. Go sign up today. It it is funny though like the idea of like chasing all of these different things versus the simple idea that like it's actually it's actually fairly simple to just like buy something online and you just want to kind of do things that make it simpler for people and make good products and stuff.

Um I think it's good. But I I do want to actually dig into that a little bit more. But uh but do you have a goal for your e-commerce businesses? Are you trying to get them somewhere? Is the is you know like how are you thinking about sort of you're at this stage right now where you're putting up eight figures in revenue a year across three businesses. Um, you know, it sounds like you're running them reasonably lean. Um, is there is there a goal to get them to a certain number?

I mean, there's there's an internal goal of like I want to see a $100,000 day from one brand. Um, we we've seen it collectively, but I want to see it from just one single brand. I love that. That's so specific. I like it. Yeah. So, I want that. I don't How close have you gotten? Uh, I haven't on one of our brands, I think we got up to 70 one time. Okay, that's awesome. uh on a day that uh we spent a fortune on Facebook ads.

I was like I think maybe the cost got broke that day or something like that. So I don't think it was even a profitable day, but it was cool seeing that number. Um anyway, and then uh I'd love to have one of the brands do 10 million in a single year. And I'd love to have uh I think it's yeah, my goals are basically 10 million for one single brand on trailing 12 months uh revenue on uh net, not on gross. Um, yeah. And then a $100,000 day would be sick.

Um, yeah, I think those are the two. How hard are you pushing to get there? It sounds like with your hands in a in a lot of different pods. It feels like you're kind of content to kind of go, we're just going to keep steadily doing this. It doesn't sound like you think of any of the businesses as being a $100 million opportunity or anything like that, you know, but maybe maybe that's wrong. Uh, no, I don't think so. I think the other thing too is I've realized that with Workspace 6 cuz I've reviewed hundreds of applications for brands.

I've noticed that you it's very I think having looked at I think at this point cuz we have 950 members on there. Having looked at 950 applications for brands that have applied for Workspace 6, I've realized that it's incredibly difficult to tell why. Like there's, for example, a t-shirt brand will join and they're at 2 million and then another t-shirt brand will join and they look pretty damn similar and they're doing 50 million.

And I'm like, what? I don't understand what's the difference between this one and this one. Like I can't I can't even like suss out why this particular brand is doing so well. And I think there's some there's some level of like resonance with customers, the available market, whatever it might be. It's just that particular product is hitting on it. I think operators within each brand don't always know that basically like either they don't know that the level of success they're having in that particular brand is due to luck to a degree or some level of like maybe they have a personal passion for this product.

So they're the user persona and they built something they need and there's a big enough TAM for that particular product and they're hitting that perfect wedge to scale up. Facebook is a machine. I mean it can basically find your available market and scale it. So it's basically like if you have the right margin, if you have the right risk tolerance and you have the right product for a large enough, you know, like in in market demand, it'll find it and scale up, you know, based on how much your operations can handle it.

Um, so any my point is for us, I I would like to get to eight figures. To be honest, I don't know if I want the stress and hassle of going to 100 million. I hear that in the way you're talking which is like you want to keep growing it but you're not you don't strike me as somebody who's like really driven to go build something crazy you know. Well yeah also I think that too it's like dep I guess it depends on the objective like I was thinking about this the other day is like I just I like we're talking because I just got back in town.

I was gone for like two and a half weeks in Europe working like two hours a day and I'm like why you know what's like what's the advantage at that point? I feel like past a certain point, I don't know if other people talk like I don't know like if other people talk about this, but I feel like at a certain point it becomes just the the fun of the game, not necessarily for the money. Um, and you don't see marginally how much more happy you're going to be with more money from your your company, you know?

So, it's like at that point it's like what am I doing this? Maybe it's like if you have a certain drive internally and you want to hit that $100 million mark just because again you love the game and you want to be more competitive and play at a higher level probably as a sport as an athlete you basically kind of resonate with that. Uh maybe that's why I I'm not very ambitious. I mean I like yeah I I relate much more to what you're saying.

My the the Europe for two and a half weeks and working two hours a day is not exactly what my version of that would be. But you know I like I've said for a while I I I really have resisted trying to grow the agency aggressively. I'm starting this brand on the side right now. It's It's not something I expect to be a huge thing necessarily. I don't know. We'll see if for everyone it might be a different thing. For you, it might be more like church and children, you know, spending spending quality time.

That's Exactly right. Yeah, that's exactly right. Like for me, like my local community is really important to me. That's centered around my church for sure. Um and and I'm not really willing to work much more than 40 40 hours a week. I mean it happens occasionally of course just like something like that but but it's really rare for me um besides besides client visits or something like that where it just necessarily eats up the full day but um but yeah you know I I I have some things like that and um and I'm I mean I'm I'm interested to hear how directly you have connected the way that you are operating your businesses and the way that you are engaging with them to what you see as the pathway to joy in your life. you actually use the word happy, what makes you happy, you know?

Um, and yeah, did did you like come to a realization about that or was it uh was it uh something that you uh sort of discovered over time? Like did your drive for a big thing used to be different and now it's this or or has it kind of always been this way for you? Yeah, I think a lot of the FOMO of like watching social media cuz you see a lot of people post up big numbers on social media and you're just kind of like it gives you that little bit of like, oh, what's wrong with me?

Why can't I do this? Whatever. I mean years of that I mean again because having launched in 2011 and being plateaued for so long and then like yeah we're doing good now but it's at the same time it's like it's I think it's also a bit of fatigue from primarily Facebook like running on any platform you don't own is it's such a dopamine high and low on an intraday basis of like hourly sometimes that like you start to get a little bit more numb and start to realize like okay like let's free focus on something else cuz it's purely unsustainable.

Um but yeah, I mean I think realizing at a certain point like especially as our our revenue and our business has got bigger I realized I'm like what like what would doing you know again I I do want to get to that 10 million mark just because I just like I want to know that I have an 8 figureure brand like a single eight figure brand. It's nice that they're split up across all of them. It's great that we have more revenue and we're doing well and you know all that, but it's like something there's something about having one single brand doing eight figures is like what I want and hopefully we'll be able to get there maybe this year or next.

Um, but yeah, it's like at that point like past that it's like what what else am I going to get? Like our some two of our brands only have two people working there. So it's like they're lean at the end of the day they're insulated. So like if if everyone were to drop in half I'm not worried about like oh crap I need to fire staff or anything like that. It's just it can it can flex up and down pretty much like within a massive amount of revenue.

So yeah, I don't know. I think I just got there a point. It's like what's what's the point of going further? And I I actually saw I think you I think you I think you were talking to maybe Ron from Dr. Woof on Twitter the other day. I love I love his post cuz he's very thoughtful. Um and uh he's very he's very analytical thoughtful and kind of very like indepth with what he his kind of analysis both on his own brands but just in general.

And uh it's interesting. I think you guys are talking about like exit strategy of how much like a lot of people talk about exiting or like the value of your brand and whatever. Yeah. And it's like once you sell it like what would you do? Yeah. You know I mean like anyway it's I mean like it's an extremely common story that people sell their business and become depressed. Like that's not everybody's story. I don't want to paint it too negatively, you know, but like I I think I think if I my two cents on this is that if if there's the calculation is actually pretty simple.

If your main meaning and purpose in life is your business, um then when you sell your business, you are losing your main meaning and purpose in life. So uh so now the answer to that might be to go start another business. But what I think a lot of people find is that they can't um they can't quite draw up the same energy for the next thing because they've already gotten to the finish line on one thing and the the thing that they were building everything towards has now gotten taken away from them.

And I so yeah, again, I don't want to overell that narrative. I think like I think there's all kinds of reasons people have that. It is it is invigorating to have purpose and things and no matter what your relationship to that purpose is, it's probably a real loss of something once you sell your business. And um and yeah, but I I think that there's something to that that when you hear people talk about what's difficult about that, what what happens is they they move from a producer mentality to entirely a consumer for some period of their life.

And I think that's probably great for a little while, but in my experience, consuming all the time is not really um is not actually that great. uh that that that's the promise that people are holding out for, but that it's actually not the thing that provides the most joy in life. Um so, not to say you should never do it, not to say you should never go to Europe for two and a half weeks and you know, I mean that's it's awesome.

Like I of course you should do those things, right? Like I I like to have fun and do things too, but that's just my read on sort of what is happening in in people's psyches when they when they go through those situations. I think also a lot of people when they've launched their businesses, they struggle to get to a point where it's comfortable enough for them to feel like they're there and then they're constantly in a state of like once I get there, you know what I mean?

Um rather than kind of stopping and thinking like okay, like yeah, there is a certain level of like comfort that comes from getting to the point where you're no longer like deeply worried. Like running a brand at 1 million is absolutely the worst. It's like it's the worst experience ever. Like 1 to 3 million, it's enough. It's it's enough to know that you're like you have something there. It's a business, but realistically, it's not enough to pay yourself any real amount of money or hire anyone of any level of like high level quality to help you.

You know what I mean? Um, so you're in like a dead zone. So, I think a lot of people probably have a little bit of like psychological trauma from musling through that range until they get there and then it feels like they're just in this constant loop to get further and further and further like something's going to go away. But yeah, I can only imagine like yeah, once you Anyway, my point is for for us the goal is not really 100 million.

It would be like we we do plan to grow and like are we sure of course we have like our brands have a uh one of our brands has a 40% year-over-year growth goal. We're currently like 70% year-over-year and then the other two are targeting 20% year-over-year um with very level varying levels of success on that. Uh but yeah, ultimately it's just for the fun of the game, you know, not so much about like specifically an exit, you know, specific goals.

Yep. Um, I mean a 40% growth rate too is like a I mean that's that's a real number, you know, that's that's like you're that's hard to do and to do that profitably and some of those things. I want to come back to something you said earlier though, um, which is something about sort of um the the comment from Taylor that allowed you to sort of resist some shiny object syndrome. Have you found that now you are much more streamlined and focused in the things that you're trying to apply your mind to in the businesses after that comment from Taylor and after that kind of realization for you?

Yeah, there's a couple things I'll actually pull it up right now and I'll read them if I can find them rightly. But there's a couple things from Taylor just in general things I've like I've read overall um over time. Let me see if I can find them. Uh I remember uh so the things that have been most helpful for me um for basically us to kind of get back into growth and scaling was uh first off one that kind of like comment from Taylor I found really interesting.

I thought you the thing I don't know how involved you were. I don't know if you were still with Taylor at CTC or if you guys were working together but the uh I remember the check is like the e-commerce playbook for 8 figure brands. Um do you remember that from a couple years ago? Uh, no. It sounds like Taylor. Uh, but was it was it his like duckweed kind of thing? Like it was like it was like a scorecard thing where basically essentially Yeah, that was all Taylor, but it it it's really helpful.

Yeah, it was super helpful. So, essentially the the premise was low opex, uh, high margin. So, like these are the this is the DNA characteristics of an 8 figureure brand. um low opex, high margin, preferential terms and suppliers, fast lead times, diverse traffic mix, and if you if you search it or you DM me, I'll try and find it and I'll drop you DM me on Twitter and I'll drop you kind of like the version I wrote up of this.

And then you kind of essentially this the way this works is you rank your brand and determine like, okay, how uh how much do I score on this on this scorecard of like how true is this for my brand? And it kind of determines how successful potentially your brand will be. But essentially the premise is from what Taylor and the common thread collective team noticed is all the 8 figure brands they work with have these particular characteristics.

So again low opex high margin preferential terms f uh fast lead times diverse traffic mix uh LTV increase of 30% within 60 days or 100% increase in 12 months. CAC to AOV ratios 1:3 um and distribution channels greater than two. So for us a big thing was basically immediately looking at that and like okay what can we reasonably achieve what can we reasonably not achieve start trying to hit them. So for us like one thing we did is literally we just took our pricing was like you know what screw it let's get our our margin you know what I mean like let's not fight for basically like saying we can't charge more money let's just charge more money and for us like at a two to three at the time I think we're 1 to3 million it's like it's not like we're risking something massive like a company like True Classics would be risking by changing their margin structure that's right you know it's like and we didn't do testing at the time I wasn't in the testing yet so I basically was just like cool boom like and we just did it simple it's like are when when we get a product five time markup like just multiply round it to a number that sounds nice cool go for it ship it um we man there's so much you could do to go attack your margin in business but that's the most underrated thing is just charge more and see what happens and and you're right like you test this now with intelligence in a way that would also allow you to see what the trade-off is much more clearly between um between uh uh you know the test like between the conversion rate and the margin and some of those kinds of things.

Shout out Intelligjen sponsor of this show. Um, but shout out to Intelligence. Sam brought it up. I didn't even have to. Price testing. Changing the price of your product is a major needle mover for operating your business with a profit first mentality and you can do it with my friends at Intelliggeems. The reason price is such a big deal, right, is because it has such a big impact on a customer's perception of the product, their willingness to pay for the product, and on your margin at the same time.

The fastest way to get more margin in your business is really simple. It's to raise the price. The problem is you don't know if raising the price is going to make it so that so uh many less customers actually order that the trade-off between the price increase and the margin you get and the potential AOV bump is not worth it relative to the conversion rate you lose. And of course, the opposite could be true, too. Lowering the price might bump your conversion rate, but is it worth it at a margin level?

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That's too high or too low. Maybe hurting conversion, helping conversion, hurting margin, helping margin. It's a really, really big deal. It's very close to the point of purchase. What about your sitewide offer? I talk about this a lot, but a lot of people just throw up a 10% off for new customers on the site and they really have no idea if that's uh cannibalizing full price customers or if they could do like a bundle or a stack and give people a bigger discount for buying more at the same time.

They don't know how that's going to affect once again not only the conversion rate but the margin because the more discount you give, the more margin you lose, but maybe the conversion rate's worth it and so on and so forth. All those questions are hard to answer on your own, but very easy to answer with Intelligjs. Go to intelliggeems.io today so that you can operate your business. Of course, everything else that you would do normally with regular split testing, AB testing, Intelligjs can handle all that as well.

The old sort of the simple replacement for Google Optimize, that kind of stuff. And you can operate your business, as I was saying, with a profit first mentality. Uh, operate it excellently. Go do that at intelligjms.io and use the code Ferris 20. F A R S20 to get 20% off your first three months with Intelligjee. Really great product and I'm very happy to recommend very happy to have as a sponsor intelliggeems.io. On on that note on Intelligence a buddy like that cuts both ways.

Obviously this is a theory of like you know like basically principles to basically apply to your business. But that being said, I think the big the more like meaningful takeaway is not necessarily the high margin. It's also purely price testing, you know, because obviously if you're price like I have a friend of mine whose business tripled in volume by lowering his pricing by like 10 15%. You know what I mean? So like it can kind of cut both ways.

Anyway, so that those are big things that are super helpful. Um that just focusing on like we went in and just gutted like all software like we basically went in like what is like meaning creating meaning here? Okay, cut it. Uh we also went through channels. So, we're like, "Okay, we're clearly a brand that makes money off Facebook." Like, and I'm like I remember specifically, this is back before I was doing the Facebook ads myself, uh, for one of our brands, and we had like a agency we hired, and this agency had us split like we're spending like a maybe $1,500 a day, and he had us on like Tik Tok, Pinterest, Facebook, Google.

And like he's like and he was tell I remember distinctly which is crazy to think about now. He's like oh yeah well we need to expand to more channels because you know we're probably getting like channel fatigue or ad fatigue. And I'm thinking like at the time having owned a small business you don't know right. Yeah. You don't know. And you're just like oh this is my agency. They know exactly what they're doing. Like you know not saying agencies don't know everything.

I know there's there's good ones and bad ones. Um but he was coaching me on like oh we need to get on TikTok. And after we took our ads back over from uh from them, I remember we were looking at this and we're like, we don't know. I don't know anything about Tik Tok, Pinterest, like all this stuff. And we know that Facebook is like our main driver. Like what would happen if we were 20% more effective on Facebook versus, you know, trying to be 20% effective more effective on all these channels.

Let's just do Facebook. And obviously immediately our sales went up from that. That was a big like simplification of just one channel. So, one rule I wrote for me, this is again back to my like kind of things that have helped us grow is I don't think that brands should expand channels more than one channel per 10 million in revenue. Um, possibly 15. Really good way to put it. I like that a lot. I a long time ago I recorded it's probably not even on YouTube.

It's probably only on my Spotify feeds and stuff, but it's just like don't diversify ad channels. Probably one of the first episodes I recorded uh when I switched over to the Andrew Ferris podcast from what I was doing before. And yeah, I mean it's just it's just the point is spend your next dollar in the place that it's actually next going to generate the highest return and for a very long time that's meta and you don't really need to explore that until you get to other places.

And I think a simple heristic of like you're allowed to think about it again at 10 or 15 million and you may actually still come back and say nope still meta but um but that like you're not even allowed to bring it up until until there's people comfortably spending $50 to $100,000 a day on Facebook. You're not hitting ad fatigue on $1,000 a day, $2,000 a day in spend. Like, simply put, you're not like, there's something wrong with your business.

Your business either has no TAM, it has bad creative, or your site sucks, or the position or the margin is terrible or the or the ops to fulfill the demand is not good, something along those lines, or it's not good. It's not meta at like $1,000, $2,000 spend. So, anyway, that was that was a big thing. Stream like we cut all channels. We basically cut all expenses. We we trimmed everything down to basically as as little as we could and got anything we did have we put on to uh variable costs.

So like we have a designer for our brand, but he's a he's a contractor and he just works whenever we have a project for him. Um so everything all of our pricing became variable for all of our expenses across both people and software and like all of our operations. You know, we moved we create our 3PL. So now suddenly all of our all of our own brands uh our shipping and fulfillment costs now are variable cost. uh there it does it scales up on seasonally up and down.

It's not a fixed cost of owning a warehouse. Um and then focusing on one single channel and then another big unlock for us was focusing on reducing the amount of touch points in the ad account. Um one reducing the amount of campaigns. We had a bunch of campaigns. Simplifying that down to a few campaigns. um simplifying simplifying the ad account structure, letting Meta just cook and do its thing. And again, I know you guys kind of like beat the drum on this all the time.

Um but you know, like really trusting Facebook to do its thing. Uh I didn't unlock the cost cap thing until more recently, probably in like November of last year. Huge huge uh advantage and it's been super helpful for us. But like really narrowing down that has been huge. But last year we grew a lot not on cost caps and I think that was largely due to I stopped making any adjustments to the ad account on uh one I would never turn off an ad.

Um I just would trust what Facebook would spend the money on um explicitly. So I would be like if it was spending on something that looked inefficient I would look at the company as a whole not the ad itself and determining like oh that ad is good or bad. I don't know if that's right or wrong. That's just the way I was doing it. Yum. And then I stopped making decisions on daily performance. I would only look at things at the volume.

Yeah. And so and then I I started looking at it on a You looked at things Yeah. 7 day. Okay. Seven or 14 day. So like at that point I trained myself where when I opened my ad account I would not look at daytoday. I would only look at the last seven days and at that point I'd look at you know rorowaz or like average CPA um in Facebook and make decisions based on that. So it's like oh you know if there was if I need to increase budget increase budget but really flipped the switch for me onto cost caps which is where we've really hit a lot of scale this year for one of our brands was realizing that I was always in increasing or decreasing daily budgets on campaigns based on the rorowaz or this target CPA on those campaigns which basically then I realized at a certain point I was like wait that's basically what Taylor's been talking about or Taylor and like Andrew's been talking about about the uh specifically like cost caps and I was Yeah, they're just doing it for you based on a better model.

Yeah. Yeah. Yeah, I know. I'm like what? I'm like what am I doing? Like I should just like turn like I'm I'm making these mint like I and I was like I'd never be confident enough to like just triple my ad spend in a single day. Um so anyway, point is is that I switched over to that and that's been a huge unlock for us this year. But a lot of it is just really just like it's not doing certain single things. It's like more just like pulling away from doing things and just doing the simple things better, you know?

Yeah. Yeah. I I mean I think what I hear in that answer in a lot of ways is um is is a is a funny combination with what you were saying earlier about your businesses because what you just described is like aimed at more margin got rid of a bunch of software and agencies and things like that that were that were end up creating a bunch more cost for us focused on one channel and got our brains out of the way. What I hear about that is like uh focus like you're just like your your knowledge from the community is focus and that has helped you to generate a little bit more there.

It's funny to compare that to how scattered you are across businesses, right? You've got like five different businesses and some of those things. But um but that maybe that's the way to actually do it. And maybe what that allows you to do is actually do exactly what you're doing, which is just play play with more businesses at a time and see where you think the real opportunity is by putting less of your effort and cost into each individual business, right?

So, you just go like, "Hey, we're just going to make the creative. We're going to run the manual bids. It's we're going to let try and get out of the way of those kinds of things and and do that." It's it's sort of a funny combo of of of uh things to be doing, but it sort of makes sense to me. Yeah. Well, I think also the uh Yeah. Yeah, I think the other thing too people don't equate enough is opportunity cost. So, back to like the single channel thing, launching any new channel realistically, unless the creative is identical.

Like, you're really launching an entirely new ability to create, let's say you're launched on, let's say, YouTube. I assume YouTube content, I've never ran ads on YouTube personally, but I assume the content you run on YouTube is very different from Facebook. Um, that might be same thing for connected TV. It might be for like for catalog, whatever channel you're, you know, pulling the strings on. The reality is it's going to take your smartest people in your organization probably a lot of mental energy and time to basically pull like to basically build that up.

It's almost like building an entirely new business. So making sure you have the scale to actually run that, you know, and invest in that and pay the right people to do the right like kind of work to make that a success and build it. And it'll take probably 6 months to 12 months for it to really work. it's not going to just click and suddenly you're, you know, scaling like crazy on catalog. You need to like learn it just like you learn Facebook in the beginning or Google, whatever your main channel is.

So that's what I found is like simplifying to one single thing. Yeah, I think like in general focus like focus was for us personally focus was huge. Um, and then I we also implemented EOS about 6 months ago to 9 months ago, which that also has been super super helpful cuz it just it kind of shaves off all the distractions once you have that scorecard, that weekly uh scorecard going cuz it's like I I have I still have a tendency that I think a lot of e-commerce founders and e-commerce operators in general have this where like they're typically very intelligent, they're very driven, they're very ambitious, and they're also very impatient.

And it's very hard to even when things are going well to just let it cook and let it like do its thing versus they kind of start to focus on like okay like well oh cuz again we're all like a lot of us are chasing a dopamine high especially seeing numbers on Facebook and Shopify. It's almost it's like almost like a a work that's gified. So you know when you hit a high number that dulls immediately and you need your next high.

Um, EOS has been super helpful. Just basically looking at things and being like looking at things and objectively seeing your scorecard and being like, "Okay, things are going well. Leave it. Just don't just keep doing what we're doing. Leave it." You know what I mean? For us specifically with our brand Sozi, like I remember for the past third, one of our scorecard metrics is like year-over-year growth. So, our target is for last 30 days uh year-over-year growth and our objective is over 40%.

And so like we got up to 112 120% during I think it was April. Nice. Yeah, I think no I think maybe it was March. Um but anyway point is like for like we were at 120%. I was like yes man awesome. You know green green green green on our EOS scorecard we're getting above our 40%. And now it's down to 80%. I'm starting to like oh my god do I need to change something? Do I need tweak with the ad account? Do I need to like whatever?

I'm like kind of starting like to tweak out a little bit. I'm like and like having that EOS system in place and like really good. Yeah. I was like realiz I'm like why am I I'm like I'm above like goal here like leave it don't touch it. Like if it keeps going and like if it does dip below that's when we we pull levers and we move things but just let it ride. You know what I mean? And anyway I think that's a big thing.

I think yeah, a huge thing is just delaying the amount of time you make decisions, which I know you talk about all the time, specifically on on on Meta and Facebook. Um, but just in general, I think that's a large like a huge problem I know I had early on with FA with uh my e-commerce journey of just too many like constant shifting, changing, adjusting, and never really letting anything time take time to mature or even do proper testing really.

I mean, that's really just proper testing. Yeah, it's it's it's uh it's interesting how much my relationship to my ad account is very similar to my relationship to like my Twitter feed or my phone, you know, where I have to like I just pull it up a million times a day and check it a million times a day and it's it's like it's such a bad way to behave. And I I've gotten better at like I've gotten I'm interested in it all the time, but it's like when I'm bored, you know?

It's like Yeah. Um uh that's really good stuff. Sam, I we've only got a few minutes left. I want to um I want to just see if there's anything super top of mind for you between conversations you're seeing in Workspace 6, between um between what you're seeing in your brands, your 3PL, anything that you um are looking at right now and you're going like this is this is like a thing that seems really um helpful that that has happened for you or for for other people you've been around that that you feel like you're thinking a lot about.

Most people I know who are involved in communities like this or who are running brands have something like that bubbling up kind of all the time at the risk of some shiny object syndrome here. Um so yeah. Anything like that for you right now? Uh I think um no I to be honest I've noticed that the quickest way to explain it especially from my experience running workspace 6 and also just being in a community and being like absorbing more information than I would normally is realizing and how much it's the exact opposite of doing things and actually it's the exact like it's the exact opposite like doing less better and the core fundamentals better whether that be creative you know running your Facebook ad account better like slowing down decision-m and doing less seems to be I've noticed a trend of new members who join Workspace 6 are always like what does everyone think about this app what about this agency what about this thing what about this server sper it's like whatever the new thing they're seeing they're like that's they're asking and over time the longer a member is part of Workspace 6 I notice one they're it's kind of like their activity level starts to slow down and what they ask about starts to shift from the next thing because you have all these experienced operators jumping in being like you can do it but it's not going to pull like it's not going to get what you want you know what I mean like it'll help maybe to a degree but like keep in mind it's incre it's might be a very small incremental help if you're struggling it's the new product it's the new creative it's the new you know maybe a price test it's more fundamental things which is kind of a again it's boring but I've noticed that there's a a all things when I put when there's enough operators in a single space like Workspace 6, I noticed that it stops being about shiny objects and starts to slowly shift into the fundamentals, which is new creative or like new.

Yeah, new creative, whatever that channel, whatever creative that might be for the channel you're on, new product, like you know, obviously operation stuff um that you know, need to be fine tuned like tariffs is obviously a big issue for everybody. Um, and then you know, uh, CR like CRO testing, whether that be price testing, shipping thresholds, stuff like that. But it's it's kind of weird that it all centrals down to being kind of boring in a weird way.

I think that's a great spot to leave people with to be honest because I think I it fits really well with what you've said so far in this conversation and I think it fits with what I see as well, which is like yeah, you focus on the highest leverage movers and that gets you really far. Like I said, like thinking thinking in terms of bets, like those are the things that really get there. And the brands that can be really laser focused on that stuff, I think can get really far.

So, um I like that a lot. Yeah. Please, please, please, please. Absolutely. One, one last takeaway, too, cuz again, I do see a lot of brands on Twitter talking who are not part of Workspace 6. It's just like I think the if you're hitting if you're struggling, it's one like if you're struggling for too long doing what you're doing, either quit or fundamentally change what you're doing because in a world where Facebook ads can reach a million people, 10 million people a day, if you can't if you can't be growing comfortably, you know, at like there like when you go into Costco and think about how much money is being spent in a single Costco in a single day multiplied by how many stores there is so much scale and volume happening in the world that if your product is stuck which is for me is a long time that's sitting at that 1 to 3 million range if you're stuck there for a long time you can't soon to break past wherever you are and maybe that's lower maybe it's like half a million maybe it's $100,000 a year whatever it might be if you're not growing there's a fundamental problem wrong and you should be you should be taking swings and making changes on the fundamental thing in a in a mindful way Not it's not the new ad channel, you know, necessarily.

It's not the new at that point. It may it may not even be you might even it might not even be about a new getting a new ad, you know, like and this is like sometimes with the chase of endless new creative like I'm a big fan of high volume creative and creative variation, all those things, but it it's still like um it might not be that the issue, you know. Yeah. a good guy to DM too is uh like well I don't know if he want like I know there's a couple members of Workspace 6 who I know they were plateaued and they they shifted to launching new products or product categories and have had massive success so far it was like it was you know maybe they're just in the wrong product wrong category whatever it might be so anyway I just think in general take the takeaway is like you know doing less but also focusing on fundamentals and if you are hitting that resistance point there's a reason why because a platform like Facebook should allow you to spend $50 $100,000 a day, you know, comfortably.

Yep. All right, man. I love it. Sam, um, everybody should follow up with Sam in a few places. Number one on those should be on X. Uh, Sam's really active there and we'll respond to your DM. So, hit them up there if you have questions about his brands, about his 3PL, especially if you're fashion and apparel. They specifically ship fashion apparel. Um, and also about Workspace 6. Join that community, which is a sponsor of this episode.

This is not a sponsored episode per se, but uh they are one of our sponsors uh on this episode, so check them out. Um and uh and so yeah, Sam, thanks so much. Uh the link for your uh for your ex account is in the description and in the show notes of this, so people can go check that out if they want to follow up with you there. Um yeah, Sam, thanks for your time, man. I appreciate it a lot. Yeah, I appreciate it, man.

Thanks for having me. I feel like we could go for hours on this. Yeah, long long time. Yeah. Thank you so much for watching or listening. I've got a bunch of great episodes coming up that you are not going to want to miss. That includes Bear Handlin from Born Primitive, one of my favorite brands and favorite people in e-commerce to talk to you about the way they went from almost no profit in the mid 8 figures to a monster profit number.

That's going to be in my profit monsters series. We're going to talk about how they got slowed down and how they lo started losing profit even though they were growing and things were going well in a lot of ways. Um, and then how he turned the ship around and generated a bunch of profit in the business. From there, we're going to talk to Bill Alessandro about the sale of Natural Dog. um what did he do to build the business and how did he get it to sale and what is there to learn right now about uh valuations for e-commerce businesses etc.

Bill is a good friend in the space. He's going to be really helpful. Bunch of other great stuff coming. Matt Pertulli is is coming soon. A whole whole bunch of interviews you're not going to want to miss. Um so, so subscribe wherever you're watching listening. Subscribe. I'd also love to hear from you. Podcast at ajfgrowth.com. If you have any thoughts, questions, any of those things, please fire them my way or do it publicly.

Andrewj Ferris onx is the best place to do that. And sign up for my newsletter at afgrowth.com. Um continue to put more time into making that better. uh including the software side of things and some of that if that's been annoying to you. There you go. Uh so uh afgrowth.com is the place to do that and and really learn anything about what I'm doing uh and what content I'm putting out. And if you want to try and work with me uh right now don't have any spaces but you can get on the wait list.

Thanks so much for watching for listening. I will see you next time.