Alex Michael welcome back to acquiring minds thanks will it's awesome to be back virtually and existentially well it was uh an existential year ago that we talked you had acquired an Amazon FBA business in February 2022 called Wallaroo the hero product of Wallaroo is a leather wallet that sticks to the back of your phone and a lot has happened in e-commerce in consumer spending since we spoke and of course you have now been in the business for 15 months instead of just those three so we're eager to hear how all of this has played out both your personal journey and to get a window into an e-commerce FBA business in 2023 so before we get into it Alex can you just give us a quick refresher on you and how it was that you came to buy an Amazon FBA e-commerce business yeah definitely uh I like to call myself a reformed corporate drone now um because for you know eight or so years or whatever it was that's kind of what I was um I worked in a number of different jobs from Consulting to energy trading to the ticket business and then Tech sales which is the last thing I was doing uh and I finally stumbled upon this wonderful world that you inhabit a lot of the time which is acquisition entrepreneurship and uh I was like I need to do that I need to buy a business and that was sort of my ticket out um so I went through that whole process of looking for businesses and and placing offers and getting an SBA loan and uh was fortunate and and privileged enough to find Wallaroo and Wallaroo found me and and here we are great and remind us a little bit more about Wallaroo Beyond just the one line that I gave it what tell us a little bit about the business yeah so walrus wallets um that like you said that the hero product and really still the hero product is a uh it's a stick on phone wallet um it's a little genuine leather wallet sticks to the back of your phone with a little 3M Adhesive and uh and it holds you know three cards and some cash and and people seem to really love it and they seemed to love it before when I bought the business and and they love it even more now um so we're expanding a little bit we're kind of staying in that that realm of sort of the minimalist carry with quality and style uh and trying to stick to that kind of General brand ethos um whether we're succeeding I don't know but uh yeah that's the business cool and it's an Amazon FBA business meaning basically all the sales were via the Amazon platform you have the product shipped from the ports directly to Amazon Amazon fulfills the entire Logistics piece right yeah for sure and when we last talked actually I was taking inventory in my house before I started to Amazon which I've now changed to a 3pl so I've got a 3pl warehouse up in Connecticut they take possession of the inventory and then they'll ship it to FBA when it's ready great got it okay Alex well just let's start with an kind of open-ended question how is it going it's going well um I think somebody asked me the other day like has it gone as you expected and the answer was the obvious like yes and no I think a lot of things have definitely gone as expected in terms of people like the product Amazon continues to be a great Marketplace and running a business has engendered a lot of freedom so I think the broad Strokes have sort of gone as expected um from a strategic perspective unsurprisingly not everything has gone as expected um which is kind of the fun part I guess I mean I think when we spoke I was like oh I'm just gonna flip on Shopify and start directing a lot of traffic there and getting all this Revenue that I don't have to pay Amazon for and you know nothing is ever simple um which is the fun part like I said but so yeah I think strategically a lot of things you know I've tried a lot I've had some expensive lessons um but overall things are going really well from a top line perspective the business is growing still uh from a gross margin perspective the business is growing still and I think the you know the the general Outlook is very positive um and in spite of some of the things you alluded to in the beginning you know consumer spending is slowing down interest rates are going up my SBA loan payment has gone up um the the indicators are all positive people still like the products they're still spending money on the products and Amazon has not disappeared into Oblivion yet so those are all good things sure they sure are well let's put a few numbers behind this Alex so when we taught when you bought the business it was doing about six hundred and fifty thousand dollars in sales annually um the product is a 15 to 20 product thirteen to twenty dollar product right yeah yeah so that's that's a lot of of volume sales I think you were selling like 30 a day I mean you know dozens a day that's that's the cash register ringing a lot of times I remember thinking which is a cool cool thing a high volume business a high volume product business um and sde was about 180 so that was of course pre-loan so the minute you bought the business that sde basically have to do to the SBA um what do those numbers look like today do you do you know off the top of your head yeah so last year we did um somewhere around 875k in Revenue um it was yeah the Top Line grip was really solid um and that was I mean that was without launching any new products which I think was the biggest positive so yeah bullet point uh underneath that growth that went really well uh advertising costs fluctuated I think that was the biggest piece where I I did a lot of experimentation last year um there was a lot of learning there was a lot of testing different things and so that percentage that I said you know that total advertising cost of sale right how much how much out of that 15 am I spending to make that 15 uh it was about 20 when I bought the business and that's our sort of healthy overall Target that number has fluctuated and I've gotten it back down to about 18 19 which is really nice but it got as high as you know 26 27 which you know you think oh six or seven percent like that's a lot but it's not much like that's a lot and that was making a huge huge difference so kind of into the weeds there but the point point being so that Mark you know my margins kind of fluctuated a little bit as I played around with price played around with advertising strategy Etc but we're kind of back to a very healthy um gross margin and when you say back to does that mean that you basically kind of reverted to where your sellers had it or did you find a couple uh optimizations as you were expensively testing stuff both I mean the the number the number is back where the sellers had it but the the the mechanism through which I got there is is very different and I think also uh has more upside um and what I mean by that is we're trying new placements on Amazon we're trying things like sponsored Brands placements uh sponsor display placements you know my Amazon store has been revamped and redesigned and so you know the overall number is the same but I think the way we're doing it allows that top line revenue number to get a lot bigger ah okay great and so that's TBD that's kind of an investment for the next year or two totally like that totally and but but then going back to the to the increase in sales from 650 to 875 did that happen also because of what what you were experimenting with or would that have happened anyway it's a good question uh probably a little bit of both I think spending more money on Advertising drove up sales like there's no question about that um and I sacrificed I mean I consciously sacrificed a little bit of that margin in the beginning to grow the business because I just wanted to capture more market share whether there was a good idea or not I don't know it was probably ego driven on some level but it worked um but the other side of it is it's a really like I said a year ago it's a really good product and people like it and the business was going to grow whether or not I did anything right so um yeah a little bit of both um and and just to put some numbers behind the ad spend you were at 500 bucks a day when they when they bought the business I assume they were you were but it was that was the number that I left the interview with and Alex let's not get too much into the Weeds on Amazon ad spending but because we all kind of hear about that and Amazon's advertising platform is now one of its Amazon's own big Revenue generators uh with it like if you own Amazon stock this is something that you hear about a lot um but just give us a picture of it just in brief is it really complicated I mean it sounds like it's become like Google AdWords over the years has become an increasingly complex product what's it look like to a total Outsider give us a 60 second tutorial yeah the caveat to this is I have like a very cursory understanding of it and that's sort of intentional um I put so when I talked about all these different experiments I did I started with something called Perpetual which I might have mentioned in our last episode that was an automated software to do Amazon PPC I saw some issues with that without getting too deep into it and so I started trying to learn and do it myself um that worked well but to your point it's it's complicated I mean it takes a lot of time like it's not rocket science you could figure it out it's sort of it's sort of a little bit art a little bit science but you can figure it out um but it just takes a lot of time and I just don't want to spend my time doing that stuff so I ended up going through various agencies and hired an agency to do it um and so I paid them about two thousand dollars a month now um but to answer your question like you know again it's it's not the most complicated thing in the world but it can become a huge time suck and it's very sort of mechanical and methodical and stuff I don't really find interesting okay fair enough um the and just circling back to the numbers and then we'll move on a little bit um your sde net where given where sales grew to but also the increase in ad spend and then you kind of level back out at 17 18 what um what uh what's your SCE look like today and with the increase the increase rate on your SBA loan what's SDA look like today for for people to understand yeah yeah it has so many acronyms I don't know and the reason I don't know is because I've I've had a lot of these little experiments and these little projects where I'm investing so first here's an example right like I've totally revamped my project excuse me a brand guide uh change my logo a little bit revamp some of the listings um and so those are things that cost a fair amount of money in the front end I think they will return something well in the back end there are signs that that's happening but maybe not and so my sde like technically my sde probably looks terrible right now um because I spent a lot of money on you know just investing back into the business this year um but the reason I brought up like gross margin for instance is it's about the same in terms of like what they call a contribution margin and contribution margin is just like it's it's essentially net margin before you know things like reinvesting into revamping your listings Etc et cetera um so yeah short answer is I'm not really sure my loan payment has gone up to about 9 200 um per month up from 7 300 so that's substantial uh yeah you know but revenue is growing right and so there's more money to play with I'm launching new products that's a lot of upfront investment I'm figuring out the Cadence of inventory ordering and I still have not figured that out you know the whole cash flow equation uh which I'm not great at yet uh so yeah I wish I had a better answer for you I don't know well well here's here's a kind of a litmus test you were I think you were within days of giving notice to your job to your your last W-2 when we spoke um that did happen I saw I saw on social media um so you have been solely or and or gainfully employed by this ever since so whatever your sde is it's paying the paying your personal bills and it's paying the bills okay Alex a couple couple things just to kind of circle back you've already touched on a few of these you just mentioned the quality of the product um and and one thing it took me many many interviews to to to ask about people um their their diligence when buying a product business or a service business is how do you know if the actual deliverable of whatever it is the business that you're acquiring delivers is good so you know it would it how do you know if you're going to buy a landscaping business that you know your your team is good and or versus they're just doing shoddy work I mean everything might check out and then you buy the business day one you find out that like your team is crappy or you know the services you deliver is crappy same with same could happen with the product if you didn't diligence it properly um but I suspect a lot of people don't did you diligence it and uh and now that you've found that now that you definitely know as owner of the business that the the quality of the product is high was that um yeah well I mean was that because you diligence it or did you just get lucky yes um I think it's interesting because there's kind of a question behind your question about buying a business in general and diligencing a business in general which is like at what point do you have you done enough diligence and figured out is this a good business is it a good product Etc and it's such an interesting question and I don't know the answer to either one necessarily but what I relied upon a lot in my search and in my diligence was Finding like what I believe to be reliable proxies uh and what I mean by that is like so for instance I told you I went through Quiet Light brokerage Quiet Light is a very reputable online business brokerage there are tons of online business brokerages a lot of them suck and that was my that was my first proxy for like okay this is a this is a first level of filtration right is that foolproof obviously not but the reason I bring all that up is because I think with the product my proxy was this has you know 3 500 reviews it had at the time and if you I mean just go and read through all those like yeah if it had seven good ones okay fine who knows right A lot of people were really happy with this thing and then obviously I brought it I bought it played with it myself gave it to my parents all this stuff but I think it's just about finding reliable proxies and I think that's true for life as well like you you can you can think yourself to death about anything but I think at a certain point you've got to like find a a reliable mechanism through which to to assess something and trust that and then make a decision um yeah anyway that is so well put absolutely a lot of Life Canon should be lived by proxy but your diligence as well or to the extent that something can't be diligent directly rather than throwing up your hands and giving up and saying well I hope I hope that works out look for a proxy whereby you might be able to diligence the thing indirectly that you're having a hard time diligencing directly great um the okay so you had talked about wanting to diversify off Amazon and I think you've already given us the hint that that hasn't played out exactly as you thought and that is something so so I want to just kind of hear you Riff on that because that is something you'll see in a lot of the listings for e-commerce businesses it's like oh this is only being sold on Amazon so the opportunity here is to you know do Shopify do your own Standalone site and for people who know that that is not trivial at all I mean there's the logistics piece of that but also just how are you going to drive people to this this new Shopify website I mean if we could all just flip a switch and get traffic to websites we'd all be gazillionaires that's hard so what have you found yeah I I found exactly what you just described very well which is you know it's it's not as easy as living on a switch I think even even having come into being buying the business with a little bit of Shopify experience I was still very naive about the level of effort it would take and so I sort of spent I spent a lot of money in a in a decent amount of time like what in a half-assed attempt to try to do that and so I dipped my toe into the Waters of you know spinning up some Facebook ads and redoing the website and the website looked good and the ads were probably fine but I was so like I was so half in half out in that effort that it just it was just a money suck right so I talked about expensive lessons like that was an expensive lesson um and the lesson was I really needed to focus time and attention and money on doing it and so it's still a huge priority because to your point I mean you look at these listings today now like I don't think people want to buy just an FBA business anymore I think it's you know there's platform risk and people are becoming more and more aware of that and so I still am very focused on making this happen but it's more like now I know I need time or I need to be able to hire somebody that has time I need capital and it needs to be a very serious intentional effort um so there will be more forays into that but it's you know it's going to look a little bit different I guess yeah yeah and then you just have to ask yourself about opportunity cost because the you know the additional thousand dollars you put into your Shopify effort maybe that could just go into something else doing something else on the Amazon platform to to juice to juice sales there exactly time or money better spent yeah exactly oh and that's I'm glad you brought that up because that's the piece I actually just missed in my response which is that was what I learned early on too is like I have this great Amazon business and I could I can just throw more money at the on that fire and it's gonna grow right like that you know there's there's lower hanging fruit within the Amazon side of things and that wasn't as clear to me as it is now I think we've been clear but let's just make this as explicit as possible if you're shopping for an e-commerce business and it's an FBA business and there's no Shopify sales to speak of or anything off Amazon really don't treat that as as something easy to do it's it's a whole other almost a whole other business I mean you already have a product you're already a product Market fit you know that the product can be sold to Consumers if it's already selling successfully on Amazon you have a a supply chain for your product but it's an entirely New Market so it's like starting up starting from a standstill in a new market because remember if you have an FBA business you also don't have the emails you have no contact information for your consumers the people who are buying off Amazon Amazon is extremely frustratingly stingy about that I think there are workarounds but you you really can't even directly communicate with your Amazon customers to somehow funnel them off or at least get feedback from them or whatever of course you can always be reading your own reviews there are ways to glean a lot of Market intelligence from Amazon but you don't have any direct contact with the consumer in theory I just want to point out it's very clear to me like it was obvious that you were very good at this when we first spoke but like talking to you A year later for somebody who doesn't own an FBA business like yeah you are dead on and everything you're saying and it's a and you're and you're bringing up really important details that aren't self-evident when you go through this process so I think this is really valuable for your listeners and I just want to give you a little a little bit of props because I know you're not going to do it yourself I appreciate that Alex yeah I do thank you yeah I'll have to decide whether or not I'm going to leave that in maybe I will fair enough okay um before we're going to move kind of into your the your personal kind of Journey about this um this whole Adventure in a minute but last um uh kind of in the weeds question about the business itself you had touched on launching other products that was something that you that was definitely a plan of yours a year ago and you touched on in this interview that um you're working on that so um talk a little bit more about that yeah we find it took me some time um we launched a magnetic version of the phone wallet um earlier this year and so that's that's up on Amazon now um there's a lot of early momentum but I think that's partially because we priced it really low to start with um so we'll see how that goes but as of now that product launch is going reasonably well and then we're about to launch a product that my sister had the idea for and it was brilliant and it's just it's like the fun of like having a business and your family gets involved it's so cool but anyway um we call my sister Wheats and so the internal code name for this project is the wallow Wheats uh I don't know why we call her weeds that was just the nickname she got as a kid so anyway um the wall of Wheats is in it's been produced it's on its way to the warehouse and we're gonna launch it soon it's like a little it's a it's a minimalist card holder with a wrist strap um so it's targeted towards women yeah so it's a sweet product such a good idea I think it's going to do really well um and I'm really excited about that one cool and is that not a product concept that yet exists at all so it's interesting on Amazon like not really not executed very well and she he actually ordered it from a similar product from another website and was like this thing is awesome but it's like 60 bucks and it's not as awesome as it could be and so you know she kind of hasn't input and then my like my parents have been so involved it's so helpful throughout this process and so we have these little like family meetings that were like what about if you do this and then my mom had a really good point about what about the little clip and all these wonderful contributions anyway that didn't answer your question but the point being not really I mean not executed I think as well as we hit we executed it um that remains to be seen but anyway really cool yeah um Alex well actually one more in the business so just reflecting back now do you think that um is there anything about the business that you bought that you kind of didn't see and don't like or would have done differently I mean you know any kind of I don't want to use the word regrets but just kind of reflecting back or any kind of Woulda Shoulda Coulda emotions there no none whatsoever awesome um I would make the same decision again in a heartbeat and yeah the guys Gabe and cam did Gabe and cam did an amazing job um they're they're really smart guys really good people and they build a really good business so I know I said that a year ago I believe it as strongly as I did yeah that's amazing we've touched on the freedom aspect to this so you were seeking uh a new level of Freedom something that corporate life had not afforded you uh and I noticed that your your tagline on your LinkedIn is working on what feels interesting so that feels like something that feels like somebody who's in control of their own day which is awesome um so did this path of buy an e-commerce business afford you the freedom that you were seeking yeah and and on more than a one-to-one level uh I think the LinkedIn tagline is is very telling so so something really interesting came from buying this business Freedom came from it in the in the very tangible sense of I am not tied to somebody else or their schedule but what also came from it that I think is way more powerful um that really strikes me now is that in buying the business I essentially like I gave myself permission I gave myself permission to start living life on my own terms and so that decision that that that that move was a message to myself that said you don't have to operate Within the cultural constructs within the narratives that you've accepted from other people from society from whatever so I think like it's engendered Freedom both in the I have freedom over my time and my schedule and that's awesome but also in a deeper sense of I feel more like existentially free to pursue things that I feel interesting and put stupid taglines on my LinkedIn and not really give a about what the response is going to be and I think that's I think there's something extremely powerful with that and so since since that happened I found myself like saying yes to so many serendipitous things just because I have I gave myself permission to say yes to whatever I want to say yes to and it's just crazy I mean I had three businesses now I'm I'm working to become a volunteer firefighter I write a bunch of ramblings on the internet and maybe people read them maybe they don't but I just genuinely really like my life now and I couldn't imagine saying that even a year ago honestly you know if that reminds me of a little a little insight that I had about um life a long time ago which was when I when I was graduating college I was I had a kind of dorm room business um web thing small but enough that it could support me and I was considering I was applying in all kinds of conventional Consulting and programming jobs uh or going full time in this business and I decided to go full time on that business and so that set me on a path of basically being like self-identifying as an entrepreneur even though I clearly already was kind of being entrepreneurial by doing this on the side in school um but but also my phrase is it set a precedent and so I like I set a precedent that this is who like this is the decision these are the types of decisions I make I make the entrepreneurial decision I make the the decision The Ambiguously you know unclear you know off the beaten path or whatever decision um and it just it made making similar decisions like that in the future more natural more obvious because I'd already set the precedent that this is that this is who I am so I often think when there's a big decision looming because we all kind of like do the pros and cons the immediate pros and cons but they're these subtler pros and cons and one of them is always like what precedent are you setting by you know taking the the left fork in the road versus the right because there's a little bit of an investment there it'll it'll likely entrench you in a similar decision in the next time that a similar decision comes along so I like I like thinking about big decisions in terms of setting precedence as well is that well said well let's get to your writing I didn't know about the firefighting but I I am one of you one of your audience members one of your readers um and one of your most I didn't catch the date I think it was pretty recent though um you wrote about productivity so can you give us the 60 seconds on it I think with the productivity thing part of why I wanted to write about it is because usually what gets said about it misses the point and so essentially what I wrote I called it the lazy emotional path's productivity and basically it was like I don't like my style I don't you know I sleep past 11 A.M all the time like I'm lazy I don't like to work very much contrary to the fact that I have three businesses I actually don't work very much um and I don't I'm not a structure guy um so my point that I was writing about wasn't necessarily that that is or is not the way to to go about you know living a productive life but it was more the fact that like a lot of the stuff that we read about when we read about productivity like all this you know Pomodoro techniques and time boxing and all this crap that people do like it's just an emotional emotional coping mechanism uh because really I think a lot of the time we're not productive because we're scared um or we're sad or whatever like it's usually an emotional problem so if it happened actually with walrut for me recently is I was spending a bunch of time re like tweaking the listing of my stick on wallet which is a product that does tons of Revenue already it's doing really well and I had already optimized it so there wasn't much left to be done but I was still doing it and finally I was like why am I doing this and I was doing it because I was scared I was scared about the product launch of the wallowets and I was scared that it was gonna fail and so I didn't work on that because I was scared so I wasn't being unproductive because I wasn't like blocking my time or whatever I was being unproductive because I just wasn't dealing with whatever like emotional I had and so like anyway that was sort of the thesis of the essay was like your productivity problem probably isn't a is it not a tactical issue no well you're a great writer man really really fun to to read your words so keep keep at it and and I assume as a writer you you always kind of have the next essay or two or three concept kicking around so so what can we expect from you in the months ahead what topics oh that's a good question uh my parents I want to write about their marriage because they are the most different people that I know like they're so different and they have the best marriage of anybody I know and I want to explore that and the fun part yeah one of the things I love about writing too is that like I'll just have a general idea of something but of a topic and I'll start writing and the essay will become something completely different so like I don't know why it is that they have a great marriage necessarily but through the writing I'm gonna have an idea afterwards and then I'll share that and then everybody can be like Ah that's true or that's not true or whatever it's fun I love it um so that's one of them last question for you Alex we um we have heard about you know your your freedom and this has allowed you to open yourself to all kinds of kind of saying yes to a lot of different stuff that you might have felt uncomfortable uh saying yes to before um the question I like to now ask is what muscle have you built through this process of buying a business and what muscle has atrophied oh that's a good question that's a really good question I think the muscle I've built is exactly what you touched on that we touched on which is just if I find that enter if I feel that energy of like yes of interest of magnetism like just saying yes and not thinking about it or not putting it off or not creating a time delay in between the stimulus and the response um that muscle has been developed a lot and I think on balance that has been a huge positive uh what muscle has atrophy that's a good question um paradoxically I think my work muscle has atrophied depending on how you might Define work like I feel a lot less we talked about the writing like writing is currently the thing that I love doing the most actually and I spend a ton of time writing and so if you consider that work then my work muscle has actually grown I write all the time but I actually don't feel all that compelled to like work on business stuff most of the time uh and I don't think that's a bad thing necessarily I think maybe I could be a little bit more structured with when like designating time to work on business but I think it's I've maybe over indexed so much the other way of just following whatever I want to do that I got to be like sometimes I gotta be like all right but you still have to like run your business dude well that's great uh Alex is there anything about uh about this buying a business buying an e-commerce business journey of yours that I didn't ask that you would want to impart to people probably not you ask really good questions I mean I think you know and you also that's funny I've had a lot of conversations with people that have watched the app last episode we did so you obviously have a lot of listeners and they're all awesome like everybody I've talked to has been awesome I talked to this guy uh Daryl the other day um and wonderful guy in Houston who's thinking about doing this and I think like I'm so glad I told you this before we started recording like I'm so glad that you're asking about the philosophical side of things because we can talk about business and tactics and all the stuff all day but like at the end of the day it's like why are we doing this why do we do any of this why do you have your podcast why do I buy a business why do I go pet the dog like you know that's I think that's sort of the the essence of living is just asking why and maybe approximating what we think the answer might be in that moment and so yeah I think for your listeners like as they're thinking about buying a business like think about why and think about you know everything within the context of why they're doing what they're doing great well put perfect note to end on Alex Michael thank you very much for coming back sir thanks will it's a pleasure I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business