All right, everybody, I've got an amazing special episode in store for you all today. So, I've partnered together with the Firing the Man podcast, and Dave and Ken, who run this podcast, have done an amazing job and interviewed Adam Feinberg. Adam had a nine figure exit just a couple of years ago, and he dropped some massive knowledge bombs as to the actionable steps that he took in order to grow his brand, big enough that he had a nine-figure exit where the majority of his revenue was coming from Amazon. So, there's a lot to dig into today. Okay, so make sure you take some notes. And then when you're done with this episode, make sure you go follow Firing the Man podcast by David and Ken.
Adam (
00:00:44) - You have to if you want to be an entrepreneur, you have to keep your expenses reasonable and you have to be willing to take risk. And if you don't take risks and take chances, you're just not going to succeed over the long haul. Kind of following strategies correctly pays off.
Adam (
00:01:02) - We also invested a lot of money in advertising and building up our brands, which I think is really, really important on Amazon. I kind of learned from it that it's kind of better in a lot of instances, to be the big fish in a little pond than like, the eighth best fish in a big pond. Amazon.com once you have momentum, if you're in the top couple listings in the category, you don't want to give it up no matter what. So I would start and people would laugh. There'd be like your air shipping, solar lights, and the solar lights cost $15 to air strip and you only make ten bucks on each one. Why are you doing that? And I said, it's worth it because we don't want to lose our rank on Amazon.
Intro (
00:01:43) - Welcome, everyone, to the Firing the Man podcast, a show for anyone who wants to be their own boss. If you sit in a cubicle every day and know you were capable of more, then join us. This show will help you build a business and grow your passive income streams in just a few short hours per day.
Intro (
00:02:01) - And now your host, serial entrepreneurs David Schwimmer and Ken Wilson.
David (
00:02:06) - Welcome everyone to The Firing Man podcast. On today's episode, we have the privilege to interview Adam Feinberg. Adam is the CEO of Web Deals Direct and Amazon FBA business that is home to more than 30 brands. Adam recently sold his business to perch, a technology driven commerce company that acquires and operates top Amazon third party sellers and other direct to consumer brands at scale, resulting in an impressive nine figure earnout. We are really excited to share Adam's story and knowledge with listeners today. Welcome to the show, Adam.
Adam (
00:02:40) - All right. Thanks for having me. I'm glad to be here.
David (
00:02:42) - Yeah, absolutely. So first things first, tell us a little bit about your background and how you got to where you are today.
Adam (
00:02:49) - All right. Well, I used to be in the IT consulting business, and I have a wife who's a physician, and I have two big kids now. My daughter is a freshman in college, but about 10 or 11 years ago, we figured our lifestyle didn't work.
Adam (
00:03:03) - And as well as I thought I was doing, she told me my job wasn't important. So you stay at home so I could have either been a stay at home dad, or I had to figure out something to do that worked with carpool drop offs and soccer, little league and karate class and all that. So I started running an SEO company at home. I put up a website. I learned a little bit about ranking in Google, helping my wife with her business, and some of her friends with their businesses. And I got lucky with it and put a website on the first page for a bunch of search terms like SEO company, SEO, agency, SEO services, and built up an SEO company up to about $3 million annually for about 4 or 5 years. I have a partner named Richard Bell, and he talked me into expanding the SEO business into the UK in 2012 or so, and we were going along merrily. Google made some changes. It started to become a little bit more difficult as a business to get small business customers competitive and Google rankings.
Adam (
00:04:10) - We were looking for something else to do. My friend Richard had a chiropractor friend who was selling swim goggles and swim caps and making more money than he was being a chiropractor in 2014 and was making fun of us, that he was doing better than we were with this little side gig, but kind of invited us along at the same time. So I told Ritch to quit doing SEO and to look into this. In 2014, I gave him a gigantic budget of maybe 25,000 bucks. I said, turn it into $100 million. And six years later, here we are. But, you know, there's a couple of things in between then that's pretty much the background of how we got into Amazon. E-commerce was just kind of a side thing, as we saw that digital marketing using search engine optimization was kind of a declining and more. Difficult and challenging business and adventure.
Ken (
00:05:02) - Yeah, that's pretty awesome. So, Adam, you mentioned you have been an entrepreneur for about 11 years. Is that correct?
Adam (
00:05:08) - That's correct.
Ken (
00:05:09) - Awesome. So did you have any fears about jumping over from corporate life to an entrepreneur, or was anything holding you back, or did you just dive right in?
Adam (
00:05:20) - I was absolutely petrified. I always wanted to become an entrepreneur. My dad was an entrepreneur, my grandparents were an entrepreneur. But we kind of grew into living at our means, living the Washington, D.C. area. Even with my wife being a physician and me having a pretty senior position at Accenture. We would spend every dime we have. So kind of the thought of jumping into corporate life kind of scared the hell out of me. To be honest, one of the things that really made it possible for me to become an entrepreneur was in 2012, we moved to Charlotte. My wife took a new job, the Charlotte Market for doctors, a lot better than D.C. so we kind of got a four for like double the salary and half the house price. So it was really life changing for my ability to kind of be able to take a chance as an entrepreneur.
Adam (
00:06:16) - When we moved down here, and it kind of gave me a second chance at it. I had some ups and downs in the SEO business when I had my first down in 2012, and that kind of was kind of the leading factor for me to move to Charlotte. I plan to get another job in the IT business, and the only thing that prevented me from doing that now is I had 15 years of telecom experience, and it's a banking town in Charlotte and no one really wanted me. So I was sitting at home with nothing to do. I figured I give SEO another punt, so that's kind of where it's at. But really what helped me is my wife was able to cover all the expenses. We went from having like a 4 or $5000 mortgage down to $1,000 a month down in Charlotte. And I really think that really having a manageable expenses is really super duper key in becoming an entrepreneur at first. And I really had to produce nothing other than my wife said it was deck and vacation money.
Adam (
00:07:15) - So I think that's really is something. I was super lucky about that a lot of other entrepreneurs don't have. a lot of my friends that sell on Amazon, even some that do it full time, they started doing both a full time job and like an Amazon side gig, and I was able to do the SEO business as a full time business. And then the Amazon business is a full time business.
David (
00:07:37) - Okay. So knowing what you know now, what advice would you give yourself at the beginning of that journey?
Adam (
00:07:44) - Really? Well, I think like the biggest, the biggest things are you have to if you want to be an entrepreneur, you have to keep your expenses reasonable and you have to be willing to take risk. And if you don't take risks and take chances, you're just not going to succeed. But I just felt really fortunate that I found these two businesses that really didn't involve a super duper giant commitment of capital at the beginning, because that's what really made it possible. Like before I started doing this, I was looking at things like franchises and buying other businesses and even like a really small UPS store or something.
Adam (
00:08:23) - You'd have to come up with three or 4 or 500,000 bucks. And that's kind of really a challenge. But doing the SEO business where you're just kind of delivering digital products, at first, you could just kind of do it at home with your laptop and make a website, and all of a sudden you had a business. And then from an ecommerce perspective, it's kind of the same. We actually started the e-commerce business in the UK. We were thinking that we couldn't come up with enough inventory capital to even be competitive in the US at first. So we went in and bought a thousand units of two items, got a couple pictures, wrote some descriptions and ran a few ads. And then we were selling on Amazon on a shoestring $25,000 budget kind of made slow improvements. You know, over time, we never envisioned it's going to be a $100 million business. Our goal was we launched the first two products. Our friend Aaron, the chiropractor guy, said, if you could sell ten units a day and make ten bucks on each thing and learn how to do that and repeat it ten times, you don't have to have a job, you know, make 150,000 bucks each.
Adam (
00:09:29) - And that was really our goal. And it was we had no staff, no building, no inventory, no overhead, just using third parties, finding suppliers on Alibaba and making up some branding and and white labeling stuff on Amazon is really what we started doing. Really, really small time.
Ken (
00:09:48) - Yeah, I want to reverse a little bit. And Adam, what you mentioned earlier was like, kind of like you had a pivot in lifestyle. So you had a, you know, you moved from DC to Charlotte. So the cost of living was. Sarah. So you had a your expenses kind of opened up a little bit. And that's just kind of the same thing that I, that I did was decreasing my expenses so I could kind of leave my engineering job and go full time and e-commerce. But I really appreciate you sharing that, because I think a lot of cultures, society today is like everybody wants to keep up with the Joneses and, and have everything fancy and and so increasing the your budget of just buying stuff.
Ken (
00:10:25) - And so I think that's crucial for anybody listening that, you know, wanting to leave their job and fire the man is to live within your means. It's a it's really crucial.
Adam (
00:10:35) - Yeah. We drove the same cars from 2005 to 2014. So I mean, that's what you really should do if you want to fire the man, you really have to cut your expenses down at first. And then if you're successful, I drive a $100,000 Porsche. I can now, and I have two homes, but you can't start there. It's just not practical.
Ken (
00:10:57) - Absolutely. One thing I want to also touch on Adam is, you mentioned, you started an SEO company, and then you kind of pivot into end to Amazon. So did the SEO skills help you? And going into, Amazon.
Adam (
00:11:13) - Definitely helped us. Definitely the methodology. And just coming up, like testing a whole bunch of different approaches and trying to figure out what were the most important things to get exposure on Amazon. Making a repeatable process is the exact type of skills that we did, doing search engine optimization.
Adam (
00:11:32) - I think it was one of the keys to my success. I have a really good friends, Travis and Jo. They have another store in Amazon that does pretty similar size to us, and we're pretty competitive with them. And what we have in common is they were also in the SEO industry. And then I have a third friend who is in the SEO industry, and he also has a pretty successful Amazon business. I think a lot of things about testing different strategies and how to effectively run ads and testing conversion rates and things like that are pretty critical. Similar kind of even though they're not exactly the same as a website. That's kind of the same thought structure of like, what are the important factors that you have to master to to do well and get conversions and show up on the first page?
Ken (
00:12:14) - Yeah, totally agree with that. And that's interesting that you and a lot of other top sellers are, you know, SEO experts in that the skills translate. That's that's interesting.
David (
00:12:23) - All right. Adam, let's let's dive into web deals direct now, $0 to $80 million in six years.
David (
00:12:31) - That is absolutely incredible. How did you scale so quickly?
Adam (
00:12:35) - Well, the first thing that was really advantageous to us is that when we first started selling on Amazon in the 20 1516 timeframe, you were able to get a large amount of reviews on Amazon by product giveaways. So basically, once we figured that out in 2015, we started going into the US market and we would basically go as big as you need to be competitive with the largest seller and whatever niche we decided to sell in immediately, and we're able to become instantly competitive. And that's not really something you can do in Amazon, like in a week or two weeks now, because Amazon cut that off as a practice. But just to give you an idea, our best product line by far is Space Saver, which is a vacuum storage bag brand. We launched that brand. We did a product giveaway in October of 2015 around the 25th of October, and by Halloween we were the number one seller on Amazon consistently every day. Pretty much like for like five years in a row.
Adam (
00:13:38) - It just allowed you to get instantaneous success. Amazon later decided that they didn't like that policy, that the rule, a lot of the reviews weren't genuine and distorted the results, and they deleted all those giveaway reviews that we did. But the head start, we got in about 8 or 10 of our most critical products in 2015 and 16 were pretty critical for about two thirds of the brands that we ended up contributing to, like our $80 million in sales even today. So that was like really a one time lucky thing. And the other thing is, once we got a couple of good listings and brands on Amazon, we really believed in it and we just really doubled and tripled, down 100% of it into Amazon. Our SEO business was still generating maybe like 50 or $60,000 profit a month. And like instead of living a lavish lifestyle, I kept driving the same car rich. And I just would do what we could to live like a middle class lifestyle and just put every single thing in Amazon. Believing this was a once in a lifetime opportunity to establish listings on Amazon that we thought would be would have a long life period.
Adam (
00:14:46) - And we really focused on items that we didn't think were, you know, trendy items that weren't going to sell well on Amazon in a couple of years. Our best categories are vacuum storage bags. That haven't changed at all. Grille covers, expandable hoses and bug zappers. And like, there's nothing very different about any of those four products. Now, as there was like five, six, seven years ago. And that's kind of why we like them versus when we first started. We started selling some trendier things like Bluetooth speakers and accessories for Apple Watches and things like that. And we just noticed that those things might do well for like six months, but then they kind of went to the next thing and then like you're listing that, you're trying to kind of set real estate down on kind of disintegrated because no matter how many reviews you had on an on an Apple seven product, everyone wants to the Apple 12 product. So that doesn't really mean anything anymore.
Ken (
00:15:43) - Yeah. So just to cover it. So you drilled into like niches kind of niche down into you know, kind of a longer product that's sustainable, versus you know, fidget spinner style products.
Ken (
00:15:57) - And you used, what I would kind of say, like your SEO crossover, you know, you kind of figured out, hey, we can do giveaways and, you know, get the algorithm going and spend that up, and you and you do that work from your SEO day. So you spun that up there. So that's a pretty incredible 0 to 80 million. And secures. So and what are a couple of the lessons that you learned along the way specifically for Amazon.
Adam (
00:16:23) - Well I learned from what we've been doing. You know, we've had frustrations up and down. I admit, like when I was doing SEO, we would take more chances to have a website. And you did something in Google, didn't like it. You could go make another website. But if Amazon kicks you off the platform, it's pretty hard to come back. So we tried to do things pretty much like the correct way and according to terms and service and all the rules, and I kind of learned over time that that's the best way to do things on Amazon, that you might think that your competitors are winning because they have more reviews than you, and they're getting ahead of you.
Adam (
00:17:03) - But eventually Amazon's pretty smart and will catch up to you. So for example, like in the grill cover niche, we have more reviews than anybody right now with our Grill Man brand. And if you checked the website like six months ago, maybe we had the third or fourth most reviews, but then Amazon went and kicked off like all these Chinese sellers who are paying for reviews. So over the long haul, kind of following strategies correctly pays off. We also invested a lot of money in advertising and building up our brands, which I think is really, really important on Amazon. And we also dedicated a lot of resources to developing a relationship with Amazon, including visiting Seattle a couple times and paying for account managers for four years in the US and in Europe markets. Another big thing that I think was really the key to our success was we didn't just focus on the US market and we focused on selling in the UK and Europe first, because that's where my friend Rich was living at the time and where we had the smaller budget.
Adam (
00:18:12) - And I kind of learned from it that it's kind of better in a lot of instances to be the big fish in a little pond than like, the eighth best fish in a big pond. Amazon.com. And I would always shock people when I would say our girl. Cover listing in in the UK and in Germany makes more money than our Girl cover listing in the US. And they're like, but you're the fifth best girl cover seller in the US. And I said being the number one seller in the UK makes more. And people would just find that like pretty much shocking. And we had about 35 to 40% of our revenues coming outside of the US. And it really helped us when Amazon made that a priority to update the revenue sharing algorithm. About a year and a half ago. It used to be if you wanted to sell products in a country like Canada, you had to start from scratch at one review or zero reviews, and they implemented review sharing. So if you had 1000 reviews in Canada and 1000in the US and 1000 Europe, you know, 3000, and that was really one of the big keys to us.
Adam (
00:19:19) - Our business exploding in 2020. Besides, Covid was all of a sudden all this work that we put in and all these other markets, they all just kind of combined in it made us like a top five seller in all our niches that we weren't before. And it was a lot easier to develop those markets because people all want to sell in the US.
David (
00:19:36) - I think that's a really good point and it's something that's overlooked often. You know, even Ken and I, when we were looking at criteria for expanding internationally, we looked at the size of the market and talked about, do we double down in the US or do we expand, you know, into the UK and in Germany, which we're moving forward with? And yeah, I think the the big fish in the small pond analogy is. A really, really good one. So you alluded to Covid being an awesome year. And you know, I think we would definitely agree with that. There have been a lot of people that are buying off of Amazon that never have bought before.
David (
00:20:12) - Now, being an Amazon seller has been somewhat challenging in 2021 in terms of inventory restrictions, increased shipping costs. So what have you guys been doing to, you know, battle those?
Adam (
00:20:25) - We started doing our own logistics in 2017 with our own warehouses. So we have a 235,000 square foot warehouse. And we got pretty nervous, or at least I specifically got really nervous about all the possible supply disruptions of Covid way back, like at the beginning of last year. So we started we were lucky we had access to a $20 million line of capital from East West Bank, and we spent a good portion of it that we thought was going to be on new product launches, getting like a year to a year and a half of inventory of everything. I was concerned of a bunch of different things. I was concerned the factories in China would close and then we couldn't get production. The factories are okay, but there's issues with shipping and we can't get things here. Or like what's happening now is you can ship stuff, but there's a delay and it costs five times as much.
Adam (
00:21:15) - I was worried about all those things. we got a really big warehouse, and when we bought our business and we started talking to them and we told them we had $30 million of inventory, they kind of thought it was ridiculous. But now that we have all this inventory at a cost basis of $3,000, storage containers instead of $20,000 storage containers, they're kind of singing a different song. But just from my experience on Amazon, the worst experiences I had was like, we would order two small and then you'd run out of stock, and then by the time you get your product back into stock and 60 or 90 days, your product is no longer anywhere in sight, and you'd have to go rerank it again. And it might not be as easy as. And a lot of times it wasn't as easy to get back the spot that you had before. So like once you have momentum, if you're in the top couple listings in the category, you don't want to give it up no matter what. So I would start and people would laugh.
Adam (
00:22:08) - There'd be like your air shipping saw lights and the solar lights cost $15 to airship and you only make ten bucks on each one. Why are you doing that? And I said it's worth it because we don't want to lose our rank on Amazon. So I kind of learned from it. You don't want an airship if you have products that are doing well, like having even like normal times, 7 or 8 months of inventory is a good caution to have. And during a pandemic, I thought a year or plus of inventory made sense and we were fortunately had a banking relationship. We were able to pull that off.
Ken (
00:22:41) - Yeah. One one follow up question, Adam, that I think that's a great point. You mentioned, having a freight cost of three K for container versus 20. It's it's really nice to have that. Now, one other thing is the inventory management. So with the what deals director was like over like around 30 brands. So a lot of the listeners to the show, you might be maybe they're using spreadsheets or, you know, a specific inventory tool.
Ken (
00:23:06) - Did you guys have like a proprietary inventory tool to track all those across marketplaces, or how did you guys track all of that to keep it, you know, just in time?
Adam (
00:23:16) - We built our own proprietary software platform, starting basically from like the very beginning of the process to keep it affordable. Our entire IT team of like 4 or 5 guys has always been in Vietnam, and we've kept it to about a $10,000 a month budget. A lot of the functionality that we built, I've looked at tools now, and a lot of those things you can see in these other tools, but we just started building and customizing this way, way before anything was good. So the very first week we're selling, we're like, okay, we sold ten widgets, but we had returns, we had ad costs. How much money did we actually make? There was no software like hello, profit or whatever to tell you what our actual real profitability was. So we built that ourselves. Then we had issues like people keep changing stuff on our listings, they change the images, the titles, the bullets were in five countries or whatever.
Adam (
00:24:13) - How do we know what the heck is getting ruined? So we built software similar to AMS alerts five years before AMS alerts and did that we had issues once we started selling more with customer service. How can we handle like 50 responses with a couple people even offshore? So before there were software that like automated responses, automated refunds and replacements, we kind of built that into our tool. And then we added warehouse management like auto recommendations, like warehousing, creating shipping, shipping labels, all that, all in-house. And considering that we showed it to perch and I still wanted to do another e-commerce business post merge, and we kind of gave them a license to it. We're using it post close as part of our Earnout period, but we're starting to use the software again for the new Amazon businesses that we're working on, because I consider it pretty critical, and I I'm not an expert in analyzing, like all the software packages that are out there now, we've done it like 3 or 4 times, and we always found some things that our software did that, you know, was unique to us.
Adam (
00:25:25) - That didn't make it worth $10,000 a month to switch over, but I think it's a different decision if you're doing 40, 50, 60, $80 million in sales, $10,000 isn't a lot versus if you're like $1 million seller. I wouldn't recommend having a software team because there's there's a lot of software that does this type of stuff out there that's going to do 80, 90% of what you want versus like when we started six years ago and there was nothing. It's just that it's not a big incremental cost to us. And I talked to people and they'll use like this software for this and this software for that and this offer for this other thing. And ours is all integrated into one thing, and it's exactly the output that we want, including managing all of our financials and Cogs and all that kind of stuff. So we just felt like that dismantling it never made any sense.
David (
00:26:12) - Do you have any for that million dollar seller that may be in a couple marketplaces? Do you have any suggestions on inventory management software that you know, if you don't have that IT team behind you?
Adam (
00:26:24) - As I said, I, I don't I don't want to make recommendations because we haven't analyzed anything in like about a year or two when we decided to build out extra functionality for our systems.
Adam (
00:26:33) - And I kind of say things that are out of date and someone will tell me that I don't like this software because of this feature, isn't there? And then they'll tell me they put that in like six months ago and I'm stupid, so I don't really want to be. I don't really want to come in here and be an expert on the latest features and all those systems. It's just we got to the point where we develop. We put so much, you know, effort into customizing the system that we're pretty comfortable with it, including even like a layout of our warehouse. So it can like map like where all our inventory is and like how like we're putting like, different brands and different SKUs and stuff together in different spots and different racks in our warehouse. So it just kind of makes sense for us.
David (
00:27:14) - Sorry to interrupt the episode. You may have heard Ken and I talking recently about a new tool that we're using for Amazon refunds. Now, I have used other refund tools like this. However, I can tell you in the first seven days they scrubbed the back end of my Amazon account going back 18 months and found $5,000 of refunds.
David (
00:27:35) - And the nice thing about this is it's my money. Amazon made a mistake and they are just auditing my account. The other thing I really like about this tool is there is no monthly fee. They only charge a commission if they are successful in getting you your money. Go to a.com get idea and enter promo code FTM for firing the man FTM 400. This is an awesome tool. Can't say enough good things about it. Now back to the episode. Well, let's next dive in to, you selling to perch to set the scene. When did you think about selling and who did you approach? Let's talk about that kind of courting phase at the beginning of the transaction.
Adam (
00:28:21) - Okay. Well, if it's okay with you, I'm going to go back to 2018, which is way before aggregators existed. The biggest problem that we've had in the company the entire time is we were able to grow and launch products and like, we weren't able to have enough money for inventory and all that. So we've struggled through different banks.
Adam (
00:28:41) - And finally we got an investment banker, which was able to introduce us to a regional bank that we got access to tens of millions of dollars, but we did things with shoestring budgets. At some point. We had friends and family investors to grow the business because we knew we could launch more products, but we just didn't have any money to do it. So we're doing about 25 to $30 million a year in 2018, and we're at the prosper show, my partner and I, and we're at a dinner for bigger sellers, which I think at the time, you needed 5 million bucks and you were invited. And I met a one particular seller from a nutrition company, and he told me that he sold the majority stake in his company. He had $25 million. He didn't have any more pressures with money. He didn't have an issue where all of his net worth was in this business. And now he was able to expand into all these lines that he couldn't before and didn't have capital issues. And my concern at first was like, well, is the private equity company that's a majority stake bossing you around? He said, no, as long as we do what we say, they trust us.
Adam (
00:29:48) - They don't know how to run a Amazon FBA nutrition company. We just do everything. So it sounded like like dream for me. There was no purchase, no thrashers, none of that in 2018. So you have to go through private equity. So we hired an investment banking company, and we tried to sell into the private equity market in 2019, and we did not try to sell the whole business like Crazy or Perch or any of these other aggregators do. We were trying to sell about like 55, 60% of the business. We still believed in the model and we still wanted to stay. And that was pretty much the case even the last couple of months before my transaction. we had tons of growth in 2020. I thought it made sense to take some off the table. We went from 40 to $80 million in sales in one year, and also our profits tripled because, you know, your fixed cost didn't really go up with like warehousing and staff and stuff. So all of a sudden our company was worth three times what it was, and I didn't really believe that any of the aggregators could buy us because it was a $100 million transaction.
Adam (
00:30:54) - And we went back with my investment banker, Gold Star Group, to a bunch of private equity firms and tried to sell again. The first time we went there, there wasn't a lot of faith in Amazon businesses and trust. But now, because all these aggregators were in the space and because of Covid, there was a lot more interest in it. But the private equity firms move really, really slowly, and there are a lot more risk averse than aggregators and having triple profits in a year. It's kind of frightening to them. So we weren't getting anywhere fast. I was taking a lot of things into consideration, including even like the fact that vaccinations were coming and I thought our sales might drop as like, as, you know, the world reopened. I was taken into consideration. You know, the Biden administration was coming in and he wanted to raise capital gains by two x. So even if our company grows from 80 million to 160 million in sales, it might not be worth any more. So once we started to not get as much traction in the private equity space as possible, my investment banker Scott suggested we talk to some aggregators.
Adam (
00:32:04) - A lot of them are bigger now than they were, like even in November or December by a lot. And when we were talking to him to do a $100 million transaction, there's only like about two of them that could really do it. And it seemed to me that that was kind of a stretch. And no one had done a transaction that big. And what really made perch like the key buyer for us is that I thought that the deal that they put together was really reasonable as far as a valuation and an expectation about what we had to do post sale for earn outs in order for us to get paid like the full amount. And then the other factors that I think are different from us than from other sellers of consideration was we had like 20 warehouse staff, six customer service staff, like four people in a software development team. And I needed them a place to land. And I didn't want them to land in a place where their their pay was worse or their benefits were worse, or they're unhappy to be there.
Adam (
00:33:04) - And perch was really, really excited about all the expertise that we had at Wells Direct. And they wanted to maintain all the staff and all the pay and all the benefits. And also they viewed our warehouse strategic. And since we've closed the transaction, they've moved a lot of the logistics from some of their other stores. over to the warehouse. And I hear that it's pretty close to full now. So it was just like a really good synergy. And they wanted to move on the transaction really, really fast. So we closed in 100 days. And I just heard from so many people that had done transactions even last six months, where were the transactions never closed or went on for a long period of time, and they closed in 100 days, and they paid us exactly what we what we expected. And they gave the staff the positions that purch with the same pay and benefits that they said. And also, I thought they had a really good transition plan. I was really nervous talking to 1 or 2 of the other big aggregators that they kind of wanted to run web deals direct immediately from themselves.
Adam (
00:34:15) - I just thought, like, it's just because we've run these small one, two, $3 million brands doesn't mean you can run a 235,000 square foot warehouse with like 30 staff really quickly. There's a lot to it. And we worked out something where myself and my partner full time for the first four months. Then we're working three quarter time for about nine months and then half time for like the second year. I just thought that was like a more realistic plan. And they're bringing on people that are experienced and we're spending a lot of time training them, and there's a lot more continuity than if it was just cut off on like May 20th and be walked away.
Ken (
00:34:56) - Yeah, that's a sounds like a quick closing to for for that large of a transaction. Now Adam. So you sold in in May correct.
Adam (
00:35:04) - I May 20th yes.
Ken (
00:35:06) - May 20th okay. So it's like month 3 or 4. And what you described is kind of a phased out approach for you and your partners to kind of train purchase team on how to manage this warehouse and how to slowly take over.
Ken (
00:35:17) - Now, did you sell the entirety of the stake? I don't know if you can get through the details or not. Or did you keep a stake? Are you going to be involved after the two years, or how does that work?
Adam (
00:35:27) - No, it's it's a complete asset. Most of the aggregators, any aggregator I've talked to, they're doing an asset only purchase, so they don't take on a liability. So they purchased all of our assets, all our brands, all of our inventory. About three quarters of the transaction was that closed. And then there's the last quarter. Is is an earnout component where we have to, you know, continue to maintain reasonable sales in the company. And what I really liked about the arrangement with perch is and what made me comfortable selling the whole business. When I originally wanted to stay into e-commerce and my store was at their do not Compete is really, really narrow and was limited to we can't go and sell the same categories of products, subcategories or products that we saw on Amazon.
Adam (
00:36:12) - So we can sell hoses, we can sell grill covers, we can sell vacuum storage bags for three years, but we could sell a storage product in a different subcategory like plastic storage containers, because we didn't sell plastic storage containers before. So it really gave us the ability to start another Amazon store, even while we're helping perch for the next two years. And I'm currently working on two Amazon stores and really values us as a partner and the type of brands that we build and the quality of products and branding that we've delivered in the past. And so our contract says we have to give them first shot at any of the stores and brands that we develop. And if they're able to to meet to, you know, to meet a market price, I'd be glad to sell with them again just because just like closing on time and doing what you're saying and having complete trust in the transaction and knowing that I've known them at this point for several years, I think is just is worth it. And I don't want to say anything bad about any small aggregators because I hear good experiences from them.
Adam (
00:37:18) - But having gone through a transaction with them and know that they're going to pay out $100 million and give me a lot more confidence that I can do another deal with them versus just someone else. Give me. Anyone can give you an Loi, you know, anyone can give you a letter of intent. But closing the transaction is a whole different story. And then like not only closing the transaction, but we didn't have issues with them converting the payroll. We didn't have issues with them changing like the billing over for all the subcontractors we use and everything. Everything was everything was smooth from that regard. Tail. And then if any of the expenses they didn't pick up because it was missed, because the timing to convert it over, they've been really easy to work with with some reimbursements and stuff like that.
David (
00:38:01) - So going back to sales day, right, you get that that big check and you know, you could take some time off, right? You could presumably retire. I was interested to hear that one of the things you really cared about was a non-compete, because you wanted to get back into the game.
David (
00:38:16) - So did you take off any time in between the transaction and starting your next one? And, if so, how long was it?
Adam (
00:38:26) - my wife and I went to Hilton Head for a three day weekend, and that was it. But we're planning to. We're planning to. Voted to buy with the family for Christmas. Really? Honestly, even like when I was operating web deals direct, I think if you're fortunate to have a really good team, which we did, I've had a really balanced life. I play tennis a couple times a week. I love to go boating. I do that during the week, I love movies, I love reading, so I don't really I'm not a really a 9 to 5 year. I think from talking to most of my friends who are successful entrepreneurs, you know, who have tens of millions of dollars, most of them work really, really hard for like two, three, four hours. They'll go do something that they love, whether it's weightlifting or boating or golfing or whatever, and then they'll come out later at nine,
10:00 at night and put another two hours in and kind of live like an off and on.
Adam (
00:39:17) - Check your email, go enjoy your life type lifestyle. And I've kind of always done that. I don't really feel like works a trap, or I don't want to log on and check Amazon or any of that. I think that's really if you can experience that, then that's like why you want to be an entrepreneur. It's not. I've been an entrepreneur where I made a good living, and I've been an entrepreneur where I've made millions of dollars and making millions of dollars is great. But when I made it like, like 200,000 bucks a year, just the freedom of being able to go on to a book club or go to take a tennis lesson once or twice a week really, really made all the difference in it. I never really felt like I had to go retire or take a whole bunch of time off, because life's really horrible. And also, honestly, my wife's a physician. She wants to practice medicine for another dozen years. My daughter's a freshman in college, my son's a junior in high school, and I have a couple friends you saw on Amazon, and I could go hang out with them a little bit, but I don't have any friends who are wanting to go retire with me and go hang out on the golf course like five days a week.
Adam (
00:40:22) - So it's going to be pretty boring pretty quickly. But I'm really trying to set up the new businesses with some partners that are experienced and give them a lot of responsibility and people that I can really, really trust so that, like, you're not always on the clock and if you can do that, then you can kind of live the dream that you can have your own business, but you don't have to be the person that's responsible for doing every single thing. I mean, building up a good team of people is super duper important, and I've really prided myself with who I've picked for my new business and what we did in Welbilt direct and try to pick really good employees and then try to compensate them super duper fairly. Even if it's above market, so that they want to succeed and then promote them really quickly. If they're if they deserve it based on their performance. So, I mean, if we did that to a point that it became problematic with perch because our top employee at Web Deals Direct was pretty highly paid compared to market, probably double.
Adam (
00:41:30) - And we also didn't require any of our employees to pay for health care, dental, vision, long term disability. Them and their spouses and their family all paid nothing. And that was better than what perch was offering their employees. So it gave them kind of a hard a heartache to kind of have to deal with some of the benefits we were offering. We offered for one K matches whether people contributed or not. But I really feel like if you do those type of things for your employees and you have a turnover rate of zero and people want to come to work because they think if I do a great job, my salary can go up 30,000 bucks in a year instead of 3%, then you'll you'll be doing the right thing, even though it sounds like it's costing you more money at first. So that's what we've tried to do always, and what I'm planning to continue to do.
Ken (
00:42:18) - Yeah, I really like that strategy out of this. That's incredible. And it sounds like you've, you know, you've built an incredible atmosphere there to as a team for everybody, you know, working and taking care of their families and then just wanting to come to work.
Ken (
00:42:32) - Yeah. Incredible story. So you mentioned earlier in the in the podcast, you know, your initial investment was in 2015, it was $25,000. And then fast forward, you know, six years and it was an exit for, you know, in excess of 100 million. What odds did you give yourself back to 2015 of that of that happening?
Adam (
00:42:55) - As I said, I never we never even contemplated anything like that. Rich and I our goal was to get ten good selling on Amazon somewhere that made 100 bucks a day each so we could make 150 K that that was the dream. And we accomplished that like in six months. But when we first started doing it, we had no idea how difficult or easy it would be. And it's definitely more difficult now. There's tons more competition on the platform. There's tons more rules used to be able to send all your inventory into Amazon. You didn't have to deal with all these restrictions that make it hard to build up a brand. It's just much, much harder.
Adam (
00:43:33) - Ads are way, way more competitive. We used to put out ads for everything, and you knew with like 100% that the ads were going to work and make money. And it's a whole entire different kind of ball game now. So I feel like we could do $100 million again. But we're coming through with, like, all this knowledge, and then we're coming through with all this access to capital, and we're having to do strategies or are planning to do strategies where you launch a bunch of products and you don't care if they make money for nine months, because we don't need to make money for nine months. And our biggest concern is to collect a thousand reviews within terms of service and become a top five seller in a niche, and then worry about making money in year 2 or 3 when we decide to sell. And then another strategy, that big strategy we're looking to do with the new stores is I talked about international and how the competition is a lot lower than that. Another thing where competition is way low in the US is oversized and over 100 bucks, and there's just no way that we could afford to sell products that, you know, to source products in a large, meaningful way that are going to sell on Amazon for 100 and 200 or $300, because you're talking like half $1,000,000 million investments on one scale.
Adam (
00:44:50) - But based on the access to capital we have this time, we're going to try to go into a lot bigger niches where there's not a lot of players because the commitment is a lot bigger, but that's not really reasonable or possible for like your average mom and pop seller and something that we couldn't do. I mean, most most of the stuff that we sourced for the first two years was like $10 a unit or less, and a lot of the things were like less than $5.
Ken (
00:45:17) - Nice. So it sounds like round two, you know, you're going in with a different game plan. Rules change, but you're adapting and pivoting. So I like that.
David (
00:45:26) - Let's I was thinking we turn the corner and get into the fire round.
Ken (
00:45:30) - Yeah. Sounds good. Adam, are you ready for the fire round?
Adam (
00:45:34) - I'm ready to burn.
Ken (
00:45:36) - All right. What is your favorite book?
Adam (
00:45:39) - But in my favorite book, Anything by James Patterson I like. I just read all of his books and I have for, like, the last 20 years, I don't miss one.
David (
00:45:49) - What would be if someone wanted to to read something by that author? What would be a good starter book?
Adam (
00:45:56) - I would start with, I read all the Alex Cross books and there's like about like 20 different ones. And it's about, African American detective in the Washington, DC area and the really interesting stories. And I used to really like them a lot because I'd worked in the DC area. I went to college in the DC area for like 25 years, and he would go into like all these different restaurants and clubs and, and all the action would take place and all these places that I actually used to work and drive through, like all the time. So I think it made me like it, like even more than I normally would have liked it. But the stories are really good and really interesting. And I could just like if you start reading the book, you can. It's hard for me to put them down. Usually if I have a James Patterson book on it on especially now Alex Cross went on a plane, I can usually get through like a whole three 400 page book in like a four hour plane ride.
Ken (
00:46:50) - Nice. That's awesome. Adam, what are your hobbies?
Adam (
00:46:54) - My hobbies. I love boating and jet skiing. And I do that probably, like, once a week. And when my business started to do well in 2017, I bought a house on a lake on Lake Norman, which was a dream of mine. I've also always really loved tennis, and I'm fortunate enough that being an entrepreneur, I can control my schedule. And right now I take 2 to 3 tennis lessons a week. You know, usually like
8:00 to
9:00 in the morning on Monday, Wednesday and Friday. So I'm hoping when Covid eases up to start playing in the league a bit. But yeah, I really I really like that and I think it's good to do some sports or do some things like get on a boat when it's nice and quiet and relaxing and just kind of separate from work and kind of do something different for a little bit. That totally takes your mind off of it. So I try to do something like that all the time.
Adam (
00:47:46) - I'm also pretty big into going to movies, ever. Regal movie card where you pay like 18 bucks and you can see unlimited movies and I, I pretty much see every movie that comes to Regal, whether it's good or bad. And my wife thinks that, like a lot of times, the doctor that I'm the laziest person in the world because she'll just say she I'm on life 360 and she'll know before I told her that you were at the movies again for two hours this afternoon. I mean, yeah, I was, but it was it was a good break. And then I'll come back and I. And I'll be ready to do a little bit of work once. I kind of put everything off my mind for a bit, which I think is important.
Ken (
00:48:24) - That's awesome. Yeah, I love movies as well and totally agree that, you know, taking time out to kind of disconnect from work is is very crucial. What is one thing that you do not miss about working for the man?
Adam (
00:48:38) - The biggest thing that I hated about working for the man, as I felt no matter what you did, you were not in control of your destiny.
Adam (
00:48:46) - Like at all. You could be really, really great at what you did. And they just pictured you as. That's Adam, the senior manager. Not like Adam, the partner. And I just felt like I had no control. In five years, I could still be, like, in the same position that I left, like. And, you know, and 12 years ago, that's pretty much like the main thing is if you want to be in if you want to be in charge of your own destiny, you really have to be you really have to own the business. If not, you're just trying to please, like, 1 or 2 particular people. It's not that hard, even at a big corporation, to prove yourself and become like a mid-level manager. But then usually, like when it comes to being like a director or a vice president, it's usually like a relationship thing. And no matter how you work, I know lots of people who are really, really fantastic and just didn't have the relationship with the right people and never made it.
Adam (
00:49:39) - And just honestly, I never I never made it. And I always kind of felt like I was passed over at Accenture. Not that the other people weren't good. There was lots of fantastic people there, but I just felt like I was at the wrong place at the wrong time without the right relationships, and I was never going to be partner there. So it made it. It made leaving a lot easier for me.
Ken (
00:49:57) - Yeah, absolutely. And, no regrets now, right?
Adam (
00:50:01) - Oh, absolutely. No regrets.
Ken (
00:50:04) - Awesome. Last question. In the fire round, what do you think sets apart successful e-commerce entrepreneurs from those who give up, fail or never get started?
Adam (
00:50:12) - The biggest things are you have to be willing to take risks until you have to plan for it to have, like, the right amount of capital to give yourself a chance to succeed. I've helped probably like 15 or 20 different people sell on Amazon, and most people probably to launch a product on Amazon could string together like 40,000 bucks is pretty hard.
Adam (
00:50:32) - And that's probably good for like one middle of the road $30 price queue. And then if the first few succeeds, they become an Amazon seller and their first skew doesn't go the way they want. That's the end of their Amazon selling career. And I kind of tell people that the chances of you succeeding now on a skew, if you don't know what you're doing at first, even with some good coaching, is probably less than 5050. So to give yourself a chance, you need to like partner with a couple people to come up with sufficient capital. Or I would recommend looking at like something in the UK or something in Canada, and starting with products where you only have to order 500 or 1000 units and pick five things, and two of them will hit and three of them will miss, and you can work on the you can work on the two things. And now that review share on Amazon, you can take your Canada products and move them over to the UK and Europe and eventually over to the US.
Adam (
00:51:26) - And you have 500 or 1000 reviews and you've built up capital on these in these easier markets. It just like I have some friends and they just put their product out there. They don't have a lot of capital. They saw something that's like two bucks. They're going to sell it for like $15. There's a million people selling it. The ads don't work. They can't stick around until they get 1000 reviews and take a loss or make no money and then just give up. That's pretty common now. And it's much different than like 20 1516. Were almost all my friends that tried on Amazon. All succeeded. I see a big, big failure rate, especially if someone tries to come in to a market with an item they're sourcing for like 1 or 3 bucks, especially in the US.
Ken (
00:52:12) - Okay, awesome. David, do you want to close out the show?
David (
00:52:15) - Yeah. Adam, how can people get Ahold of you?
Adam (
00:52:18) - how can people get Ahold of me? My email is Adam Feinberg 73, at gmail, and I'm on LinkedIn.
Adam (
00:52:25) - And if you send me a message on LinkedIn, if it's not spam, I'll respond to you. So I hope that works.
David (
00:52:32) - Yeah. Absolutely. Absolutely. Well, wanted to thank you for being a guest on the show and, look forward to staying in touch.
Adam (
00:52:39) - All right.
David (
00:52:40) - All right. Thank you. Thank you, everyone, for tuning in to today's Firing the Man podcast. If you like this episode, head on over to Firing the Man com and check out our resource library for exclusive firing them and discounts on popular e-commerce subscription services that is firing the man.com backslash resource. You can also find a comprehensive library of over 50 books that can, and I have read in the last few years that have made it meaningful impact on our business or that. Head on over to firing the man com slash library. Leslie, check us out on social media at firing the man in on YouTube at firing the man for exclusive content. This is David Schwimmer.
Ken (
00:53:21) - And Ken Wilson.
Outro (
00:53:22) - We're out. Thank you for listening.
Outro (
00:53:24) - Visit Ecomm Breakthrough. Com for more information. If you've enjoyed today's episode, the best way you can show your appreciation is by clicking the subscribe button and quickly leaving a review. See you again next time!