How does a guy who declares personal bankruptcy end up building two companies that generate over a million dollars in annual revenue?
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Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart. How does a guy who declares personal bankruptcy end up building two companies that generate over a million dollars in annual revenue? Chris Snook is the founding investor and board member of Parallel 6, a social mobile company that says it can grow its clients’ sales with a phony mustache. He’s also the editor-in-chief of No Limit publishing group, a publishing company with a new take on the written word. Chris, thanks for doing this interview.
Chris: Thanks for having me.
Andrew: That was personal bankruptcy, right? Did I get that correct?
Chris: Yeah, it was caused by a business, but I had it structured wrong, so that is accurate.
Andrew: Let’s go back in time to 2002. You were stuck in an airport. Why? What happened that year? Go straight for the pain.
Chris: Yeah, straight for the pain. Well, that was a long time ago. In 2000 I started my first business. I had one job my whole life, and it was about 12 months. It was [?] at San Diego State while I was in grad school. So I started a business while I was there, and raised some money for this idea that was essentially a brick and mortar facility. It was kind of a coaching spa and fitness type stuff, which was the area I was interested in at the time. So we raised $154,000 worth of friends and family, of pull money as they say, and then over that two-year period while we were trying to get launched, I put in about $350 of my own, leveraging my house and whatever else I had. Credit cards, and all that stuff.
I was good at raising money, and I was good at talking about what we were going to do. I was horrible at putting people in place to do it, so in 2002 we had zero revenue, we didn’t have a location, we had just lost the last bid that we had from a developer partner. That really just left us kind of [?] in the water. During that time I was doing direct sales and trying to make money on the side with everything from network marketing to insurance to whatever it was. But I was half a million bucks in debt. I had fallen behind on my house, my car, and everything else.
My mentor at the time, one of the biggest shots is the business we were direct [?] for, I was making about 20 grand a month but it was on paper. The company wasn’t able to pay me my commission, and there was this lag between the receivables and everything else, so I was being toted around as this guy who’s crushing it, but I was broke. So there’s this big fiber of inauthenticity. I was young. I was in my, 26 I guess, at the time now. I was trying to do the best I could to hold everything together.
Anyway, I was half a million in debt, my mentor says, “You’re going to lose your house if you don’t come out and see me anyway, so why don’t you come out and see me instead of staying in those four walls with nothing to eat. He bought me a ticket, I flew out to, I was going to meet him in Michigan. When I got to Dallas, my connection to Chicago Midway got canceled because of snow. I had run out of gas on the way to the airport. My buddy picked me up seven miles short of Long Beach Airport because I didn’t have any money in my account to put gas in my car.
Drove me the rest of the way and I landed in Dallas, with, and I didn’t know this at the time, but I had sweat pants on and I reached into my pocket and there’s a nickel, which was kind of ironic. So I had a nickel on me. I couldn’t buy a soda or anything. I went to make a call to let them know I was now going into O’Hare but my phone had been shut off because I hadn’t paid the bill. So, it was a pretty scary time.
Somehow I got out of that. I blocked out a lot of it, but I ended up landing in O’Hare five hours later. I went to sleep right in the terminal basically until they called for our flight. I ended up in O’Hare and whoever they arranged to pick me up at Midway figured out that I was going to be at O’Hare, picked me up. I went to my mentor’s house. They kind of walked me into this bowling alley and all these sales guys were there that were all looking up to me and were “Hi, he’s here” and blah blah blah because they thought I was making twenty grand a month.
He gave me a high five, and he had balled up $39, which is a weird number but that’s what he had, and I didn’t know. He balled it up in his hand and high-fived me, and I felt it, so I kind of discretely put it in my pocket. I was like “I’m just going to freshen up.” I went to the bathroom and opened it up, and started counted it, and saw there was $39. Up until then I had no idea how I was going to get back from Long Beach to Oceanside, where I lived, once I landed because I had no gas. So I figured, well there’s my gas money, so I started to cry and I was like “Holy crap, I’m never going to end up here again.” But it was an interesting time.
Andrew: He needed to ball up the money and high five it to you because you guys had to maintain the illusion you were doing well, right?
Andrew: He couldn’t just hand it to you and all these other people believed you were doing well. I want to understand in a moment what you were feeling at the time. Also, my agenda for this interview is to find out the mental change that you made that turned things around for you. Because, if my audience is in a similar situation, I want them to be able to draw on your experience and use it to turn things around for themselves.
I want to know, you believe that today that your business can’t be killed, so I’ll ask you how you got into that place and why you got into that place and how, more importantly, my audience can. I also want to find out you got your clients and built up your business. By the way, I saw as I was saying that you believe your business can’t be killed, you were hesitating? Do you still believe that or are my notes wrong here?
Chris: I would rephrase that a little bit. I don’t believe any business can’t be killed. I believe businesses are killed every day and mine are no different, potentially. I believe a true entrepreneur can’t be killed.
Andrew: Ahh, OK.
Chris: I think there’s a fine line there, so I would disagree with the statement that businesses can’t be killed or mine can’t be killed. Mine have been killed a lot over the last twelve years, and some by my own doing. Some I’ve shot in the head and some have been, you know, blown up without having anything to do with anything I could control. So, I hesitated only because I’d rephrase that. I agree that entrepreneur’s DNA, I think the phrase that I’ve used before is that it is kind of like a cockroach. You just keep coming back and somehow they keep getting bigger. It is definitely a mental shift that is required first for that to be the case.
Andrew: All right. I’m so glad I’ve got video here and that I can pick up on the little cues that tell me when my notes are wrong.
Chris: I wouldn’t have let you slide with it. I’m glad you picked it up though because I kind of went “Ooh, no I don’t agree with that.”
Andrew: Actually, before we continue, my goal is to tell the story and get all those points in there, but today, you have two businesses, as I mentioned earlier, that you are a part of. Parallel 6, I said you can grow company sales with a phony mustache, that’s because I picked it off of the web site. Can you give me an understanding of what that business does? What is a typical client, and what do you do for that client so we know where we’re going with the story.
Chris: Yeah. I don’t run Parallel 6 day to day. It’s actually my partner and tremendous CEO David Turner runs it. He’s done a great job and the creative guys are doing all kinds of funny stuff like that. I actually didn’t even know that was on the website, I haven’t checked it in a while. That’s the nice thing about being a board member and an investor. You don’t have to micro-manage everything. They do a couple of things. It started as a social media management services firm.
Back in ’09 when everyone was saying that you needed to open up a social media channel, we were speaking something very few other people were speaking. That was we’re going to do social media and open up a channel specifically to drive four things; revenue, identity, volume, or profit into your business and if we can’t measure that, then you won’t keep paying us. That was kind of our initial market was with a service based model. In 2010 David invented the captive reach technology and then the team implemented that and developed that. Captive reach was almost an answer to two things. One to build enterprise value and increase the multiples. Service based businesses have lower multiples than a technology based business. So it was about shifting it from a service only to a technology play.
Chris: The other thing it was, was that it came back from feedback, from our client base, which was that this social media stuff is almost like a call center. If they were a larger client, like a middle market company or a larger Fortune 500 client that we’re trying to sell into, they already had someone on staff for $120,000 a year or $80,000 managing this social media channel. Yet they weren’t able to predict what it was doing for them. They have 7,000,000 fans on Facebook but what the heck does that mean?
Chris: Captive Reach was really an answer to take loyalty rewards programs that already existed, so Marriott: 35 million rewards members all carry a plastic card. None of us carry it around. We all have one, never remember to use it. We also all have a smartphone. How does Marriott create a loyalty rewards program on mobile that isn’t a pain in the a*s? When all these companies were implementing their mobile thing, it essentially was taking a snapshot using your camera of your rewards card, upload it to this email, we’ll email it back and we’ll confirm it. It was, like, 15 steps. That’s what genesised [SP] the idea.
Captive Reach got it so there was this man of services component where we would build out social media channels for brands. But then we would also tie in a white-labeled dashboard of analytics for a mobile app that could do everything from content management, like WordPress for mobile, your content management, very simply, API and any other rewards feed, their promotions or newsletter feed, all into a customizable app structure and link it to the user’s social media. So as a profile user, I open up my Marriott or my XYZ rewards program and my profile is connected to my Facebook, my Twitter and my LinkedIn. It’s pulling in all my data without me having to put it in personally.
Chris: When I reach something about the two for one stay in Las Vegas at whatever Marriott property and I say ‘Wow, what a great deal!’ if I hit “like” it on my phone our technology would push that out to my feeds om my wall and populate the link so people on my Facebook feed, my captive reach audience, would now see that same promotion that I had on my phone and I would get rewards points for that. I would get $50 or whatever it is. The way to incentivize users to hit “like” it instead of using Hoot Suite and getting nothing for it using their mobile phones and getting reward points they could cash in for free drinks, free whatever.
Andrew: OK. So I have the app on my phone and I got it from Marriott. Is Marriott a client, by the way?
Chris: I have to check. I know we’ve been in a sales cycle and we’re ready to close them at the end of this month and I don’t know. Honestly, I don’t know.
Andrew: OK. So we don’t know if they’re a client yet. But suppose the Marriott is a client. I as the end user download the Marriott app. You guys are the ones that are powering it but it’s my connection to Marriott that I notice. If I see an offer that I like on there, I hit the “like” button. My friends get to see it and I get a reward for doing that. That’s the basic idea behind the property and in addition to it, you also had a consulting function and that’s what the software grew out of. All right.
What you do run day to day is No Limit Publishing Group. I called it a publishing group with a new take on the written word. What’s the difference between you and the other publishing companies. Then we’ll go to the audience. I know you want to hear how he got here so, of course, we’re going to spend most of the time on how he went from there to here. But give me a quick understanding of what this publishing group is.
Chris: The new take on the written word is an old take. You’ll hear me do that a lot as we talk. But sometimes the stuff that’s best to reinvent is the stuff that’s already been invented. Publishing, as many of you have probably come to realize, is in a mad, major shift. One thing that I made the decision of, coming out of 2008 when I had to file, was that I wanted to be in a business where there was going to be tremendous shift and where you were going to be able to compete with very little behind you in a big space. I didn’t have anything to start with. I had been cleaned out so I needed to find places where the barriers to entry seemed high but where they actually could be low. One of the areas that I identified that was going to be true was content. So the limits spun out of that because-
Andrew: Is the idea with no limit that if I want to become, sorry, is it that it’s a publishing company where I can go to build a reputation for myself? You guys help me get the book created, you help me publish it, you help me get it out there and sold. Am I right?
Chris: So the business model and the philosophy behind it is really what makes it what was our competitive advantage thus far. That was in publishing right now, domestically, there’s over 60,000, and this is an old number so it’s probably bigger than this now, there’s over 60,000 self-publishers in the United States alone. Over 60% of them, back in ’09 when I looked at this, are sole proprietorships. If you do the math on that it’s extremely fragmented and essentially what you have is you have a market where authors are going I can’t make any money publishing my own book.
Chris: And I can’t get a deal from a traditional publisher fast enough so I’ll publish myself and then I’ll make money by charging other people to do what I did. Nothing wrong with that but that’s kind of what happened. This major fragmentation of the low end of the market.
At the high end of the market there’s all these price pressures because of Amazon, and Apple now, and everybody else basically just squeezing price points down and becoming a digital Walmart and hell bent on doing so. You have the traditional New York publisher model which was pay in advance, develop the property, release it through Barnes and Noble and Borders and everything, which has gone away and going away even faster as we speak. You know, that traditional model of sell through doesn’t work any more.
Horizontal publishing across multiple genres so that you could fill up a store with one call, like Random House used to be able to do for Borders, doesn’t work any more. Because people may still go to the stores but they’re not buying there.
Chris: There’s a couple of things that needed to happen and no one was doing them. One of the things no one was doing is no one was looking at authors as brands or businesses. They were looking at them as tangential to the process of getting a title that might do well. We took an approach of we look at authors like portfolio companies.
Andrew: Chris, I want to do, I’m sorry to interrupt but I want to tell this in the form of a story because if it comes across as a business plan we’re going to lose the audience and they’re going to want to go on to do something else. God knows there are billions of other things on their iPhones or Android devices that they could do. I want to get to the thought process in the form of a story so that they can care about you, get passionate about where you’re going, and be curious about how you came up with this idea.
Chris: No problem.
Andrew: Let’s go back to that time. You got handed $35 in a high five. It’s time for you to turn around. What happens after that? How do you go from that to building the next company? And then we’ll hear about the shocking thing that happened to you after that.
Chris: What happened was I got handed that money and I was grateful, obviously, because it answered a problem I had in the immediate future. But I spent the weekend and nothing really changed for me financially over that weekend but I got away. When I came back I realized that these people, my mentors who I had really looked up to for the last two years, who I have a lot of gratitude for a lot of the skills they taught me, had a life that they wanted. And that I, without realizing it, had allowed that to become the life I thought I wanted. It wasn’t the life I wanted. There were things I was not comfortable doing. Like pretending like I was, you know, all that stuff [??].
It was a maturing experience because it didn’t cause me to not respect and be grateful for what I had taken from them and what I had learned from them and what I had been given. But it also allowed me to find myself again and realize that I could leave the rest. When I came back I really just made the decision that I never wanted to feel that way again. I never wanted to feel this conflict inside of, you know, saying one thing and being the other. I understood the balance of, you know, acting as if and painting a vision for the future. I understood that but I had crossed that line without meaning to, if that makes sense.
Andrew: Yeah. At first you do want to look confident. You look like you made it and are going places so that people believe in you but if you take it too far then you’re really living a lie.
Chris: And I think everyone has a different line. Right? I think everyone’s comfort level is going to be different with that. But I had certainly crossed mine. I guess the take home message is if you cross yours and you don’t go back you’re going to be sick. Because I was getting physically sick. I mean I would like have ulcers. It was taking its toll on me.
There were a couple of things that came out of that. One was, I didn’t mean to do this, but I really was chasing the money. More than the other stuff. And there’s nothing wrong with chasing the money or pursuing wealth it’s just that I had it way out of whack. I didn’t mean to, it just kind of, that’s where you end up. In hindsight it was a very valuable experience because it allowed me to start to really make some changes to the way I approached everything in my business and what I said yes to and what I didn’t.
Yet I still had this cliff I had to climb, right? I still had to figure out a way to come back from $500,000. I didn’t file or do anything, even though I was advised to then, because I felt like there was no business to cause it. It was me causing it. It was almost like an education, you know. I didn’t have to spend all of my money on my house. I didn’t have to go raise money for, so I took it upon myself to essentially just eat it, face the music. And over the next two years I jumped into everything from wholesale finance lending to analyst work for an LBO firm in the lower middle market to flipping real estate properties, which you could do back then and make some money at it.
Andrew: By the way, where did the $500,000 go? The money that you were in debt for?
Chris: Oh man, it went to, I don’t remember the specifics. A chunk of it went to, I don’t want to call it a seminar series but there was a investment banking, it wasn’t a group, but essentially it was this workshop type thing that you went to and it was supposedly accredited investors and everything else and it was expensive. It was ten grand to go and you went for five days and you networked and then you also pitched during the night. So we went to that twice, that probably ate up 14% of the 154 so whatever that was, that was probably like twenty grand, all in. We spent money on multiple websites. We spent money on PPMs. We spent money on business plans.
Andrew: What’s a PPM?
Chris: Private Placement Memorandum.
Chris: So, when you raise money, officially you have to have a Private Placement Memorandum and, you know, the Blue Sky laws and everything so that you can legitimately raise from accredited and non-accredited investors.
Andrew: I see. So you went to a seminar that taught you about how to raise money for a business idea. You then started filing the paperwork to raise money and the whole thing, was it a scam at the end, do you feel? That series, that part of your life?
Chris: I don’t think so. I think that the seminar that I went to, I don’t believe it was a scam. I think it’s like a lot of things that I’ve experienced in life and spent a lot of time going to seminars but also even helping putting some on in my, in the last decade. And I think what it is, it’s just based on the users awareness, you know, there was people in that seminar who had raised money and were running business for six, seven, eight million dollars a year that two years later hadn’t even started. One of the guys I met had built a debt negotiation company that went from zero to seventy million in three years, so these were things that were legitimate businesses that kind of got spawned in this thing. But again we’re talking about if you were to do a percentage of the room, two to three percent.
Andrew: I see. So it’s two to three percent giving hope to the others in the room. To the other 97%, and those 97% were spending tens of thousands of dollars on various aspects of building this. And the business that…
Chris: I think for me, I think that the point that I make as it relates to your overall concept of this. I think the point for me, the mentorship, early on one of the things I did decide was I wanted to be those guys. In other words I wanted to be two to three percent because I wanted. It became very apparent to me that I didn’t care what the environment was, whether it was a pure scam, whether it was a pyramid, whether it was the most legitimate workshop NBA driven thing on the planet, there was always two to three percent that had the result and there was always 97% that didn’t.
So, as I started to just like observe that, I think mentally early on, even at that time, even when I was half a million dollars in debt, I said, uh-huh, I’m not going to be one of these people that loses at the end. I may lose for a while but I will figure this thing out. And I don’t know whether that was smart or not but at the end of the day that was the decision I had made that was like the early iteration of that mental change. I’m going to be one of those three percent that figure this thing out and I’m not going to blame someone else, I’m not going to point the finger or call, you know, if I get ripped off, I get ripped off, it’s just a part of the process.
Andrew: Why do you feel like you needed to make money that desperately? And by the way, I share that. When I was younger, when I was starting out in business, I would have done whatever it took, I was that desperate to do it and I’ve talked to the audience about what, why I felt like I needed to do it. I’m curious about you, why do you feel like you need, why did you feel at the time that you needed to do it?
Chris: Yeah, looking back it’s a lot easier, at the time I don’t think I had an answer. You know, looking back I think the reason why that was the focus was because I hadn’t experienced it. I think if I was really to look back and just say, what was it that really made that the driving force? It was because that was what was new. Like, I come from a family that I wish every child in America could grow up in, I mean, I’m very fortunate in that. Loving parents, support, but we were middle class when there was such a thing.
And, you know, and we were never starved but I had like five outfits for school. So we weren’t like, you know, I had Monday, Tuesday, Wednesday, Thursday, Friday, it was my outfits and they were always the same. So I didn’t come from money but I came from a very loving family and so we always had this thing, well we’re rich in love not money. And I guess early on I decided I wanted to be rich in both because I didn’t know what the other one felt like.
Andrew: Was there something that made you want it beyond not knowing what it felt like? Because there were a lot of things you didn’t know what it felt like. You didn’t know how, what it felt like to jump out of an airplane, you didn’t know what it felt like to live in Iraq for a year, but you specifically pick this and it seems to me that when you’re that determined that it comes from some kind of inner need. Some inner, something that’s missing, doesn’t it?
Chris: Yeah. Well, there was when I started my entrepreneurial career, my athletic career had ended and I’m a football player, you know, I was a football player, I’m not one anymore obviously. I related to them and it still comes up now, as you just heard. There was so much, I put so much into the development of my athleticism, my body. I love football. I love it to this today. But when I was playing it was this thing that could not be filled. Like there was no amount of time in the day that I could dedicate to that that I would ever get sick of it.
I knew my career was going to come to an end no matter how good I was or wasn’t. No one plays forever. I graduated college and I wasn’t offered anything for a year. And then the XFL, which is the [??] command league that came out for one year, gave me an invite to the combine. In 2000 I went up there and it turned out that was my like my last hoorah. I ran my 40 in front of Dick Butkus and he wasn’t impressed and that was the end of that.
What was funny is football ended and I knew I had to fill that void.
Andrew: I see.
Chris: I didn’t know what I was going to fill it with but I knew I needed to do that. Then I read a book called Thinking Burwich [SP] in 1999 right before football kind of ended. That started to spark something. Then I dove into this personal development stuff. I started listening to Andy Robbins, things like that. For whatever reason that made sense to me. This whole idea of personal, professional development and building a business. I started reading Rich Dad, Poor Dad and all the [??]. I bought 200 books or audio tapes in the first 12 months. If this was around I’d have been listening to this and I’d have been taking massive notes, right? I was craving that kind of insight.
I think what happened was business was the only thing bigger than football that I could do for the rest of my life. I think that’s why I ended up there honestly. It was just something that filled that void of push, push, push. You know, like do more, get better, get stronger.
The money thing again, in hindsight I think once you’ve bought a bunch of BMWs and you’ve proven to yourself that you can do that stuff then that starts to be less of a thrill, right? I got to that point. I bought more cars than I ever thought I could and have gotten rid of them. Made money and lost money. Then it was like OK, money’s just part of the game. It’s a score card, it’s like scoring a touch down. Big deal? You need them to win. That’s all it is.
Andrew: OK, then it became not about more cars it became just about more points on the board.
Chris: Well, it became about enough points on the board to win whatever game you were playing honestly.
Andrew: Right, to be top 3% to not be another player who’s sitting on the sidelines watching everyone else enjoy themselves.
Chris: You said my favorite phrase. I’ve had a phrase that I’ve used for my whole life, I picked it up somewhere along the line. It is I wanted to be a player, not a spectator. Players are willing to get hurt. Players are willing to do things that spectators aren’t. But at the end of the day everyone wants and wishes they could be a player. I just wanted to be on the field. This is the field.
Andrew: Yeah. For me, by the way, I’m looking at the camera and remembering what the motivation was. I look like a wreck. I’m looking at myself and you side by side and going what the hell. If I looked like you I wouldn’t feel at all ambitious. I would just feel like, in high school I’d be satisfied because girls would be dating me. I would have an interesting life outside of school because I could play sports. No wonder, I had nothing else to turn to. I needed to succeed in business. And you know what? I shouldn’t be doing these interviews in a t-shirt because it only makes me look scrawnier and it makes my head look like gigantic and then it emphasizes all the weirdness.
OK, I’ve got to make this interview really strong because, what’s up? Now I’ve got to channel all my energy towards making this interview effective for the audience. Or else I’ll just be another whack job with that look in an interview show online. All right, let’s make this really strong.
Chris: You have that really nice skin tone. You know, all through high school, I’m pale, right? I’m white as a ghost. When you’re a baby that’s cool and when you’re 30 something years old it doesn’t matter anymore.
Andrew: I’ll take it
Chris: I would always look at you and go man, I wish I was tan like that. I could go out in the sun without turning into a tomato.
Andrew: All right, so you decide no more of this. I’m not going to aspire to be these three percenters because frankly a lot of these three percenters have nothing going on for themselves. They’re probably being high fived $36 and that’s what makes them a little bit better than me. What do you do at that point to go to the next stage in your life?
Chris: I, you know, the underlying thing was I just kept moving. I, again, going back to football, not to beat it to death, but you don’t stand around the pile because that’s where you get hurt. In business I kind of applied that same thing. When I got back I had the next opportunity. Somebody said I have two leads, I’ll give them to you. I’ll buy your house. I’ll make your payments current.
A friend of mine that ran $70 million company said I’m not going to let you lose your house so you can not worry about that. But here’s what’s going to happen. I’ll pay your payments current and I’ll take back a note on the house. You have 30 days. If you repay me then no big deal. If not, I’ll take a quick claim deed and I’ll own the house. And I’ll let you stay in it until you can repay me, and then I’ll give it back to you once you’re current.’ So he took off the plate the one thing that really scared the hell out of me at the time, because I was afraid to be homeless. And I didn’t want to fail and I already felt like a loser and everything else.
So he gave me enough of like, ‘I’m not going to do this for you, but I’m going to make it so that I’m your debt collector versus someone you don’t know.’ And then he said, ‘Here’s two or three leads that I don’t have the time for my business. You’re a good sales guy, if you can help these people out you can keep 100% of the commission and use that to get me back.’
So he gave me opportunity, he didn’t give me the answer. He just gave me opportunity, so I ran with that and I closed, I think, one of them. And then I generated another on my own, and that gave me enough money to kind of not have the quick claim thing happen. So I kept the house. And then I was, ‘OK. I’ve got to find something else to do.’ So I can’t remember exactly what I did next. I think I’d done enough research on real estate, I started flipping properties and just doing other things. I dug ditches for over a year in Rancho Sante Fe, right near where I lived where all the rich people were. My buddy’s dad was a plumber. I would go out and I would shovel and move dirt around for the plumbing installs on these 20,000 square foot custom builds to make $100 a day. And, you know, be like one of those guys at Home Depot.
And then at 3:00 I’d punch out. I’d clean up my nails, and I’d go out and put a suit on, and I’d pitch at night. And I did that because I needed cash to buy food, because my bank account was always in turmoil. So I couldn’t get checks. I just did what I needed to do, and it was very humbling. I remember standing next to four or five of my Mexican brotherhood that were working with me, that were going from 3:00 a.m. to whenever just to [??] their family eat. I remember thinking, ‘Holy crap. These guys don’t know what I know.’ I know this is temporary, because I’m doing this and I’m grateful that I can do this. But these guys are doing this because this is what they know how to do and it’s what’s available to them. I’ve got a whole world of opportunity available to me. I’ve just got to get back on my feet.
And it was so humbling because I was like, ‘You know, I’m no better than any of these guys. In fact, they may be better than me because they’re doing everything they can to make their family successful. And they just don’t know that there’s other things they can do. I know I’m not doing everything I can right now, so I’m going to start.’ And it was almost like they inspired me to just put all the pretense aside. Just go, ‘Look, you got your clock cleaned. Get up off your feet, do something about it.’ It was very good at the end of the day.
And then in ’06, I had done some consulting. We’d published a book called “Personal Trainer’s Burnout”, self published it at the time. Essentially it was for fitness professionals like me that said, ‘Here’s how not to lose half a million dollars trying to start your own business.’ It was very simple. We gave it away for free and generated leads. And then we would sell fitness consulting seminars and fitness consulting services to companies.
One of the companies we did some work for at the time was Total Gym. I did some consulting through them, and then that lead to the identification of an opportunity that we thought we could build these urban Country Clubs. In ’06 we invested in that along with a partner. We went 50/50 in this development to put a lifestyle enhancer club, as we called it, in downtown San Diego. And we were going to Beta and then scale it up. It didn’t work. 18 months later, toxic partnership. We burning about $40,000 a month. Our consulting business was doing really well at the time because of that movie “The Secret” and some of the people I was working with.
So every dime we were making over there was covering the upside down loss in Define, which was the life enhancement club. So I was just floating money from one thing to the next just to keep it afloat. The partnership got toxic and he quit. He said, ‘I’m done.’ We were about ready to tell him to buy us out, and I didn’t know this but he filed Chapter 7 a couple weeks later. But because we were partners, I didn’t have to be disclosed that. So we got left with a 2.7 million dollar liability between the leases, equipment, overhead and everything else.
So my wife and I jumped in and we figured out, ‘Well, how can we save this business, turn it around, cut some overhead?’ And get it so it’s cash flow positive. So we spent 90 days cleaning up all of that. He was in charge of operations, so we had to go and repair all the relationships. And that was a good experience just remembering that people want to talk to you if you’re the owner. They want to talk to you not your Operations guy. And at the end of day, relationships are the most important thing.
So, we just were honest with them. We told them what happened. We apologized and we said, “Here’s what we’re going to do to fix it for you.” We got to work, and then when I was renegotiating the lease was when I found out that he filed, because the attorneys for the billion-dollar landlord said, “We were going to let you off the hook, but you said you didn’t want to, and we appreciate you wanting to do the right thing, but by the way, we just got this notice. So we want to let you know, if we renegotiate this thing, right now you can walk and we’re not going to come after you. And we’re your biggest debtor.”
So, it was like 1.7 million was their number. So they said, “If we don’t go after you, it’s very unlikely anyone else will, and if they do, you’ll be able to figure that out. But if you do this, and we sign off on this, we won’t have a choice. We’re going to have to go after you if it doesn’t work. And it doesn’t seem like you’re as passionate about this business. It just seems like you’re trying to do the right thing.” I said, “I am trying to do the right thing. He said, “Well, we appreciate that. If you want out, let us know.” So I talked to my attorneys and talked with my accountant, and they said, “Chris, this is why they created this law. It’s not something you wanted to do, but this is the only choice for you unless you want to work for free for the next couple of years of your life.
And so, that’s what kind of triggered me. We had it as an S Corp, which if you do that, make sure you have a holding company because the problem with an S Corp is it’s a [??], so when your partner files bankruptcy, everything falls up to you. And that’s what happened is he filed. So there’s no protection for me when that happens, and so that’s what caused me to file, and that was ’08, and then I came out of ’08 and started fresh, and literally discharged that case six days before Lehman [SP] went out of business. So I was excited, and I was coming out of hell, because when you’re in a case like that, you can’t work and make money, because everything you make they look at as something they can take.
So, you’re basically in a position where you can only earn a bare minimum, but because I didn’t have a salary, and I only have two speeds, on or off, it was like either don’t make anything or go out and make 20 or 30 grand a month or more, and then you’re liable. So I didn’t work, so it was tough. I had friends buy us groceries one day. I couldn’t afford tampons one time for my wife, which is the most embarrassing thing ever. But, you know, all that stuff makes you stronger in the end, and when I came out, everyone else was going into hell because the world was coming to a financial ledge.
That was my advantage, was that people needed help turning things around. I had new energy, and I went in and did a bunch of little consulting with equity projects for a year until Parallel 6 and No Limit and those kinds of things came along. So I jumped in and out of three or four turn-arounds that were start-up type things and I took my fees on the back end, took a little on the front end, and helped drive revenue or help create new processes, and make them better stable. I put together a couple hundred thousand bucks that way between ’08 and ’09 and that gave me a little bit of a war chest to start in ’09.
Andrew: Let me pause and ask some questions. Actually, I’ll tell you, the reason I didn’t talk much over the last few minutes is because there’s a fire alarm going off here. I put myself on mute, and I raised your volume, and I’ve been able to pay attention even when there’s a full chaos going on outside the office. No limit, I will not stop. I’ve got things to make up for here. So here’s what I was wondering. You had to file personal bankruptcy because of what your partner did? I understand him filing bankruptcy, and I understand it hurting your business, but the part that I didn’t catch was why you had to file for bankruptcy.
Chris: The business was structured as an S Corporation, which has a lot of benefits, some of which you may be aware. You can pass through any losses to your personal income, so it’s a good tax structure. The bad thing about an S Corp is there’s very limited protection to the officers and directors and the owners, because it’s essentially you. An S Corp is almost like you. So when he filed, he was now untouchable. When you file a Chapter 7, your debtors have 90 days to basically come after you and there’s a hearing, and then at that hearing it’s either discharged, meaning they get whatever they get out of the assets that are there. If there are no assets, they get nothing, but they can no longer come after you. So he had filed, but I didn’t know that his hearing had already happened, so when his hearing happened no one went after him, because the business was still around.
Andrew: OK, and so the business had debt, they didn’t go after him, and he didn’t have any money really to do any…
Chris: And now he has protection because his filing had been discharged, and I had not filed. Because he was protected, the only person they could come after was me.
Andrew: Did you personally sign for it? Because with an S Corporation, as long as you did…
Chris: Well, yeah.
Andrew: You signed for the debt.
Chris: Well, like, we had an SDA loan with Wells Fargo for the construction but you know, everything is personally guaranteed with that kind of stuff anymore unless you’re. So, you know I had, he had personal guarantees too, but the real reason why it kind of forced my hand is because his hearing had already happened and he was now untouchable and so the only guy they could come after was me.
Andrew: I see, and so you…
Chris: Since the business didn’t have any assets that equated that to the liabilities they were looking at me and it was either drag it out or nip it in the bud and so what I did was I filed and then I called the relationships, cause one of the things you can do if you’re ever in that situation, hopefully you’re not, but if anybody ever is. I filed because it was the only logical choice that made sense at that time but I also still wanted to make sure that I had relationships with the people that I wanted to have relationships with so even though the landlord, even though I didn’t care to have a relationship with them in the future, you know, I went and I talked to them, what’s going to make this right for you.
A lot of the people, believe it or not, said, look it man, things happen, you know, you failed, go start over, right? And I was like, oh wow. You know, I really didn’t think they were going to do that. And other people said, you know, I’m really disappointed and I hope you make this up to me. And I said, well, how would that look? You know, here’s what I got to do. I got to put you on this list and technically I don’t have to repay you but I would be willing to repay you, you know, over this much time if that would make our relationship stable again. Some people said that would work. So I literally repaid them.
Andrew: And even though you didn’t have to you still wanted to make good and you did make good with many of them. But what I’m wondering about, Chris, is how can I avoid getting in that situation where a partner does this to me? I mean you guys are partners, you signed up because you believe in each other. What do I do to prevent that?
Chris: Don’t have a partner.
Andrew: Don’t have a partner. And if I do, don’t sign, don’t do personal guarantees with that partner because if anything happens he could put me on the hook for everything.
Chris: Well, yeah, and I say don’t have a partner, I’ve had three partners. The most recent one was with no limit and in all three cases something has happened. Been different each time. The most recent was I got sued and it was really just an attempt to say I want out and I’d like to go do my own thing but instead of talking and using the relationship we had cultivated he had chose to go that path which I don’t fully understand, I don’t really know why, but it doesn’t matter, he did. So I had to buy him out.
So, in all cases where I’ve had a partner, my experience has been that if you’re going to partner with someone make sure that they are, don’t grow people up in your business if you don’t have to and I guess what I mean by that is, the three partners that have not worked out for me are all people that I really liked, I really saw talent and ability in, but hadn’t really had their teeth kicked in, hadn’t really proven that on their own they could fail and come back and you know, this was their first rodeo or they hadn’t had any adversity hit yet.
Andrew: Is it also that this partner specifically, without mentioning his name, is a guy who wanted to get rich quickly and when he wanted to get rich that quickly there wasn’t enough time to put a foundation underneath your business together. That because he wanted to get rich so quickly that maybe he took risks and he took on debt that he shouldn’t have taken.
Chris: Yeah, the partner in the second one, the one that I had they filed bankruptcy, I think he had a different idea of how fast and how long some of this stuff takes. I think he definitely, without meaning to, I think he thought, oh, I’m going to be rich in a hurry. I’m going to do this and in a couple of years I’m going to do that and so he was riding the coattails of our previous successes but he didn’t have ownership in those and so even though we had it very clearly structured, there was all this stuff that started to happen. And I think that was a definite thing. You know, I think if someone wants to get rich quick that’s a horrible reason to start anything. It doesn’t mean you won’t. It doesn’t mean you won’t.
I mean, look at Groupon, they got rich quick. It doesn’t mean you won’t, it just means its a horrible reason to start. Start something because you feel like you can change something for the better. Start something because you feel you have a market that’s being underserved and it pisses you off. Even better if it pisses you off because then you have this real passion and this tie in to it. Start because there’s a vacancy, but don’t start because you want to get rich quick. Because even if you do, then what? Right? Now you’re rich so you think you’re done? You’re not going to be. You can only buy so many BMW’s, you can only buy so many things and it ain’t going to fill the void. So, I’m not saying don’t do those things. I’m just saying that it’s a horrible reason to start a business, but it’s a great outcome.
Andrew: Right, right. You know, you were talking earlier about not even being able to afford tampons, about going from this dream of being like Napolean [SP] Hills hero or Dale Carnegie or maybe actually Tony Robbins is one of the guys you were reading. They create this image of how big you can be. To go from that to not being able to afford the bare necessities, at that point why don’t you say, this whole way of life is not really working, I don’t want it, I just need, I’ve got a wife, I just need a simple job that’s going to pay the bills and I’ll find my fun on the side. I’ll find my fun in playing sports, maybe teaching kids how to play sports, maybe in raising my own family. But I don’t need this stuff. Why go back in a third time after being hit on the head so hard twice?
Chris: Well, I did say those things. I did say those things.
Andrew: And here you are though, you’ve started companies, you’re building them up.
Chris: I’ve said those things numerous times and if history is any predictor of the future I will probably say those things in different ways in the future. I think what the shift happened somewhere in the last couple years, maybe from ’08 till now, is I even tried, I went out on interviews. You know, because at some point you sit there and go, well I got to be responsible here. Right? Like there’s going for the dreams and there’s doing what you love and then there’s like being an adult. And I think you always have to have your eye on being an adult, right? But that doesn’t mean you have to have a job.
That’s not what that means, but you have to be open to anything. So I did. I’ve had those conversations. I went out on interviews in ’06 and ’07 I went out on interviews in ’08 and no one would hire me. Everyone was, I’d love to work with you but I can’t hire you, I don’t know what I’d give you to do because you wouldn’t fit here. And I was like, no, no, no, I can fit here, I can turn all this other crap off, I don’t have to be the biz dev guy, I mean…
Andrew: What about sales? You seem like you’d be a natural at sales.
Chris: Yeah. I tried all kinds of things.
Andrew: And they turned you down even for sales jobs?
Chris: Well, they didn’t turn me down but what I wanted, why I was doing it, so I guess that’s a good distinction, they didn’t turn me down, it’s just that the reason why I was willing to do that was I wanted some stability in my income. But if I’m going to go sell something, I have no problem going to sell something, I don’t need a base to do it, I was looking for someone who was going to pay me enough so I could live and whatever my commissions were above that to sell. I have no lack of opportunity to go sell stuff. I’d built sales teams in excess of 8,000 distributors.
Andrew: But they would have done just commission for you and just commission wouldn’t have given you the security you were looking for.
Chris: Yeah, they weren’t offering me anything I couldn’t do on my own so I think the distinction was when I was going I was specifically going to try and get that safe, secure job, just for a little while until I got my feet back because I felt like that was responsible but the handful of times that I considered doing that I think that God, the universe, whatever you want to call it, I believe that it just got to the point that if that was what you were supposed to do I would have provided that opportunity because you’ve tried, you’ve been open to it. Like I was open-minded to anything.
But what always seemed to happen was it never showed up and I ended up finding the next business or the next thing I could do without anybody else in my way and so I did it. And then there became a point when I just realized, you know what, Chris, you can fight this all you want, this is who you are. And I think that’s a shift that when you get to it, the problems won’t stop but when you accept that then you realize the game that you’re in. And the game I’m in is build, entrepreneur shit. I love it but it’s not even like I love it because I want to convince myself I love it. I love it because I guess I have a choice, I don’t feel like I have choice. I feel like my DNA goes, this is the way you go. For many years I tried to convince myself of that and maybe I did. Maybe at a subconscious level I finally did but either way that’s where I’m at.
So, I think that’s the key, you can’t be an entrepreneur and not consider everything and for a while I was afraid to consider a job because I would feel like somehow I quit my dream or I did all that. And I think everybody goes through that. The truth is you can’t quit your dream. If you really dream it, it may not show up and it probably won’t show up the way you originally dream it, but you’ll get the feeling that you wanted and that’s all that really matters. And if you really dreamed it, you can’t stop it from happening if you try. Because there has been so many times I felt lost and I was doing crap I never thought I would do, from digging ditches to whatever, and here I am. So, how do you explain that if there’s not some fate or destiny or grand design to the way that we’re built.
Chris: I mean…
Andrew: You mentioned Word Press earlier in the interview and I remember now when I interviewed Matt Mullenweg of Word Press and I said, why are you willing to take on this big risk to start Word Press? And he said, it’s not such a big risk, he says, I’m a developer, frankly if this business doesn’t work out there will always be someone wanting to hire a developer. And it’s true, for the tech co-founder, tech company there will always be a job but for the sales guy, I don’t think it’s nearly as easy because as you said, the jobs that are out there are basically going to have variable salaries, in fact not salaries, it’s going to be commissions. Which means that you won’t get the security that you went to a job for which means if you’re not going to get the security you might as well get the freedom and the upside of running you’re own thing. Which also doesn’t have security.
Chris: You said something that’s important, for those people who are more on the sales side, they’re not a developer, they’re not a technician, they don’t have the knowledge like some of the other founders you talked to. Here’s my challenge and also my belief. A true sales guy doesn’t need anything but a product and anyone else who says their in sales but who needs a salary isn’t really a sales guy. I was looking for a salary, people were always trying to pigeonhole me in sales because they knew what I could do.
Andrew: I see.
Chris: I can do a lot of things. But I was looking for a specific job at those handful of times when I was, well maybe I should consider getting a job for a minute. I was looking for a job but everyone wanted to go, no, no, no, you need to sell a product. And I was like, that’s fine and I will but. So, I never have looked for a base selling, I’ve always looked for the next product. A true sales person all they need is a product. My buddy sells door to door alarms right now and he’s killing it. That’s a horrible job, knocking on doors selling home alarms. But he’s making twice what he was making at his analyst job for a big real estate firm a couple months ago and he’s getting valuable experience.
More importantly, he’s getting confidence in dealing with rejection at the point where now it’s not going to bother him as much as it once did. I think those things are the most valuable tools anybody can have because if you don’t know how to sell at some level, you are always vulnerable to the economy changing. If you know how to sell something or influence someone, I don’t care if that’s your full-time job or not, you are truly sustainable. That’s my opinion. So I think everyone should develop a salesmanship because whether you’re selling someone to hire you, selling a product, selling door to door or doing whatever, you are needing to influence someone, selling an idea…
Andrew: So in answer to the question I had at the beginning of the interview which is how do you keep your, I said at first your company but you corrected me and said yourself, how do you keep yourself unstoppable, it’s to know how to sell. Because if you can sell, you can sell someone on hiring you, but you weren’t able to get someone to, to sell someone on hiring you.
Chris: No, I was able to sell them on hiring me they just wouldn’t hire me the way I wanted.
Andrew: I see. OK. But if you have the ability to sell you can always…
Chris: They would hire me but they were like, oh, we want to put you in this position or what if we gave you this territory, but I at that time, and the only reason, I wasn’t looking for a product to sell, I already had products to sell. I was looking for something I could do to create stable income. So, you know, it was about, it was just about trying to create an income stream that didn’t require me to do anything but show up and do what I was told. Which, I think it what everyone wants. But that’s just not the way that entrepreneurs are built and so what it did for me is it was really just a lesson of turning over every rock, humbling yourself whenever you need to humble yourself, being willing to say I failed because if you can’t then you’re stuck. As soon as you say, I screwed up, then it’s over and you can move on. You admit it, hey, I screwed up, that was a dumb choice.
Andrew: So what makes you unstoppable is unwilling to accept failure and the ability to sell if you give Chris Nook a product, or he finds a product, he can sell it and that’s what makes you unstoppable.
Chris: Yeah, and there’s always something that someone needs. There’s always going to be product.
Andrew: Let’s move on then to the new product. We have two different companies that we talked about in the intro. Do you want to talk about Parallel 6 first and then go to No Limit Publishing? And I’d like to spend more time on No Limit Publishing because that’s where you spend most of your time. But the idea for Parallel 6, you told us where it originated from, what’s the first thing that you did to build it up? To, well you invested in it, you didn’t launch it, right?
Chris: Yeah, I invested in it. I mean, the first thing that David did was to put the team together. There were about five founders, a couple of them were put money in and a couple of them put sweat in type of thing. And so the first thing we did was we built out a model for what we were going to sell, how we were going to deliver it and who we were going to go after. And the initial model was not the model that we were with even three months later.
It was selling to smaller businesses, selling to local politicians and selling to basically to, almost as David would put it, to convince the younger guys and other founders who had not yet had the pattern recognition of building a business that that’s not who we wanted to sell to. But if you tell them that’s not who we want to sell to then what’s going to happen is they’re not going to believe it. If you let them sell to those people and let it not work then they quickly learn on their own that that’s not who we want to sell to.
So, that’s the app to get into business, is start where you can start and if you’re dealing with people who it’s their first or second rodeo and they may not have the same pattern recognition as you do, what you do is you need a team to do anything, let them do it even if you know it’s not going to work. Right? Have a structure in place where you can, you know, almost predict that that’s not going to work and you can have cash in the bank for it and everything else, but so they can get the lesson over early.
As soon as we did that we moved out three of the founders over the first twelve months before the equity cliffs kicked in and, you know, we branded the company from Blue Media to Parallel 6 and then, you know, he hired on more senior people and some of the founders are still there and they’ve done a great job and they’ve developed and grown in experience with the company and he’s done a hell of a job, quite honestly.
Andrew: You’re an investor in the company. How did you go from being a guy who had to file bankruptcy to being able to invest in this new business?
Chris: It doesn’t take that much money to start a business today. We seeded Parallel 6, I think, with $65,000.
Andrew: OK. And it was for people investing either sweat or money.
Chris: Yeah, well we put, we seeded it with actually, I believe the founder round total was 65 grand. So, you know, and I was one of those people. So like I said, I dove into a couple of turn-arounds and consulting with performance back end and I just kept the extra money and stored up a little bit of a war chest so that’s the money I put down. You know, we start the business with very little and try to drive cash flow immediately so that you can reinvest it. So it’s a very bootstrap mentality.
Andrew: All right, you gave us a little bit of an understanding of where the idea for No Limit Publishing, what’s the first thing you did to get that off the ground? To get your new publishing company off the ground.
Chris: The first thing we did was we had a couple of people who had bought an online course for about $220 that were in the database and it was all about how to write a book in ten hours.
Andrew: You guys wrote the course and sold it online?
Chris: Yeah, the original, my partner had written it and sold it online.
Andrew: This is the partner that you broke up with years before or a whole different one?
Chris: No, this is a new guy, this is a guy I had mentored for three years. We never had worked together and then he brought me this kind of course and said, I want your help, I want to build a real publishing company around this and I said, well, if you’re interested in building a real publishing company, fine. If you’re interested in selling a product over the web, you don’t need me, I’m not interested. He agreed and so we started this company and then we figured out well what does a real publishing company mean, right? What is that?
So we began to try and figure out what is that, number one, and then where we started was we had this group of 147 people that bought this $200 course. We needed cash flow immediately in order to hire anybody. In order to even travel to a conference to figure out what should we do with this business. So we put out an upgraded version for $2,000 and it included other things and we sold that to I think twenty or so, so we picked up like $40,000 in the first two weeks selling a better upgrade with more deliverables to the group that had already bought this course.
Andrew: That’s crazy. All right, so the funding came from your current customers who bought a higher end product. You didn’t even have to go after investors in order to fund this business?
Chris: Oh no, we didn’t go after investors for this at all.
Andrew: OK. So what was the next thing? I was interrupting your flow.
Chris: So we made $40,000 and we used that to hire our first staff and get an office suite for a couple hundred bucks a month and so, and then also just develop what the product it and then I think in the second month we enrolled like another, all I know is $68,000 within the first two months and the cost of delivering that product was somewhere south of 40% so it was like a 50% margin.
Andrew: Wait, 68,000 selling what? I’m sorry, I’m not following that.
Chris: Selling that upgraded.
Andrew: That course, that course made $68,000? Wow. All right. Why didn’t you stick with course then? It seems like you guys were knocking it out of the park with such a quick success.
Chris: Well, we could’ve. The main reason I didn’t want to do that was because there was a lot of them, it was not, we didn’t have a lead system in place to generate ongoing database for that and I really, you know, candidly we could’ve and it might have been a good business. It wasn’t what I wanted to do and it wasn’t what I felt the opportunity was. I felt like the opportunity was to own content. The course was a service driven business, it was transactional. It was selling to the low end of the market. It was a bunch of people that maybe just wanted a bullet to throw up on their website to get some e-mail out, and it wasn’t like real publishing. It wasn’t shaping content, it wasn’t putting out stuff that would have asset value 3-, 4-, 5-, 10-, 15 years from now because it was good. So it was a means to an end for me. It doesn’t mean it wasn’t a good business model, it just means it wasn’t the business I wanted to be in.
Andrew: OK, so now you’ve got the cash. What do you do next?
Chris: We started to invent solutions for the market. So what we learned from that was we learned that these people were still going forward, so they were hiring companies that do self-publishing, from [??] to [Lulu] to create space, any of these things, they were paying thousands of dollars and they were just a number. There were 21,000 people sold into [??] that year, one company. 21,000 authors. So it was very transactional, and we felt like we could serve these people better, we can do this at a more efficient price, and we can treat them a little bit differently. So we kind of evolved the product and we iterated into an $8,000 version that was like distribution and all this other stuff and they kept the rights, and then we started to notice that there was a better opportunity…
Andrew: I’m sorry, let me pause it there, because this is fascinating. So you sell them now what seems like a low end product for $240, but that’s a good amount of money and it’s a good product. Then you go to the next level, you charge them $2,000, and now you’re realizing they still want to hire a company to produce their book for them, to publish them. Instead of sending them out to someone else to publish, we’ll be the publishing house. For $8,000, we’ll give them a high end product. They don’t have to learn how to do it themselves, we will do it for them. And you’re recognizing now that there’s another step forward, and that’s where I interrupted you. What is that next step?
Chris: A lot of that came from the conviction I had too, because as I had mentioned earlier, I self-published a book with my wife in ’06, and then in ’07, I did a second one with the same vanity publisher. And those two books, to get them published, was $88,000. So I had personal experience. I knew what it was like to be them, and I went, well, wait a minute, I spent $55K on one book, [??] the first edition, and yes, it was worth it. I made money off of it, it became a profitable thing. But holy crap, for what I spent I could have gotten a lot more. So we were able to take personal experience and I was able to say, look, don’t do what I did, because we’ve got a better thing for you. I’ve walked in your shoes before. So we [??] the $8,000 version. We did that.
Then that was getting…the competitive advantage to the $8,000 one is what we were doing for $8,000 what a lot of other competitors were doing for $10,000 – $20,000. So we’re doing it better, more [??], but it was cheaper and we were still making margin off it. But I didn’t want to stay in that business because there’s 60,000 people in that business and you couldn’t really compete. So again, it was a means to an end.
Then the entry started to shifting to digital as the iPad rolled out in April 2010, and we had just found out about this company called Vook, which was another startup, and they were trying to become the Kleenex of video-enhanced books.
Andrew: Vook, for you transcribers.
Chris: Yeah, yeah. So they had a couple of traditional partners, but they really didn’t have a lot of publishing partners, so they needed content. So I called them up, I met them on Facebook, and then I called them up cold, and said, look, we can bring you authors from other labels whose publisher will not invest in doing a book with them, but who doesn’t own their digital rights. If I can go get those authors, will you do a deal with us? They said yes, so we did the deal with Vook.
Now, we have something no one else has. Right now, we’re able to go out and say, look, you’re with Random House, or you’re with Penguin, are they going to do a book for you? At the time, everybody thought it was hot because it was brand new and it was, wow, there’s video in that book? Holy crap! How cool! So it was like a catchy thing, it was on the Today Show and all this other stuff. So we went out and said, look, we’re the first independent publisher to partner with these guys, and we’re the only way to get you up there if you don’t have your publisher already doing it. And most of these other publishers weren’t willing to spend the money to do it because it was unproven.
So, it gave us competitive advantage, and that’s when we started to actually attract authors who were on other labels that weren’t being paid attention to to give us rights to stuff that that label was not going to develop.
Andrew: I see. So they already have a publisher for the paper version of the book, but they don’t have an agreement with the publisher for a digital Vook-style product. You make a deal with them, you get their book, you guys enhance it for them, and you send it to Vook to be published in the App Store and to help them generate revenue in a whole new way and get to readers a new way.
Chris: We went out with that story and that became a $20,000 product that we can put people on, and then we also began to set aside capital because we had the margin now from some of the other stuff where we said, ‘look, if you do this, we will [??],’ because it costs us money to keep it up there and to promote it, so we did five of those and then we found out that it wasn’t being priced right, so we didn’t agree with the pricing structure. They were doing these video enhanced books for $5.99, $6.99, so we said, ‘wait a minute, the production value of this is 20 times the production value of a Kindle and you’re charging $3.00 less, that doesn’t make any sense to me.
You’re basically saying this is worthless but it’s got all this extra value in it,’ so they ended up changing their business model and turning it more into a platform that they licensed to publishers, and they’ve done significantly better now since they’ve done that, but again, what we were in the midst of is, we were growing and we were trying to figure out and navigate our path to profitability and sustainability, and we were using and partnering with companies that were also trying to do that, and so every market, as their dashboard shifted, ours shifted, and vice-versa.
So, the first 12 months was really a constant evolution of what we were delivering, how we were delivering it, with the consistency of we’re treating these authors like brands and we’re committed to their long term success, and we’re going to hold their hand as much as we can through every process. We focused only on business books and only on [book leaders] because that’s the area that I understood, that’s the area we’re passionate about and we wanted to be good at one type of author.
So, that’s where we started and then what happened was, we got on panels with other publishers. I was on a panel in October of that year with Harper Collins and New World and some other big publisher, and we were just so drastically different, when I walked off stage, I got bombarded by 40 or 50 authors, some of which had been New York Times’ best sellers, Wall Street Journal best sellers, who said, ‘I’ve got another book, or I’ve just got rights back. I want to work with you, how does that look,’ so then we started to package up the marketing stuff and deliver that to Parallel 6 and some other vendors while we invested in the publishing scene, and so it was just a constant iteration of our business model.
Where we stand today is, we say we have to [??] invest in the book, so we’ve built out a digital publicity department and a social media active [??] department, and they commit to a six month contract on the marketing side and let us deploy a certain amount of money, and if they do that, then we do all the publishing stuff, distribution, digital, and we make the investment in them. That is truly this model where we are investing in their asset creation, we are giving them higher royalties, and we co-own the rights to that success with them, and they’re deploying the marketing money through us which was a way for us to essentially mitigate our risks into acquiring content, by offsetting it with service fees that help the author, so that’s how it evolved.
It all started out by just basically getting into our customers’ world, selling them a solution that they wanted and needed that day, and then learning from that and selling them a different that was better the following month, even if it wasn’t to them but to their counterpart, and then just constantly, fluidly evolving to where we are.
Andrew: You give them an advance, too, do I understand that right?
Andrew: No, you charge them?
Chris: We require them to invest through us, a portion of their marketing budget…
Chris: …and we also have to like their content, so in other words, we look for authors now where we feel like we understand their business, we understand their brand architecture outside of the book, we have a clear way of figuring out how that book is going to enhance and amplify the success of their other offerings, and actually have a stand alone revenue stream of its own, and if we like the content, we like the author, and we can see that, then we take them in and we build out their product and they commit to a marketing budget of six months with us at a minimum number…
Andrew: What’s the marketing budget that they would commit?
Chris: The average contract value would be $25 grand. We’ve had contract values [north] of six figures, but it’s a minimum commitment with over a six month period of $25.
Andrew: OK, so the author invests, or his company invests $25,000, or more or less, I guess, the average is $25,000. You guys make the digital book, do you also make the print book?
Chris: When we say book, we don’t think of any form, we do everything.
Andrew: Everything for them, and help them market it?
Chris: [??] audio, if there’s a market for the audio book, we’ll build out the audio book. We build it out in stages and stage is a little custom, but we do the print, we do the digital, we distribute both, we look for enhanced digital. We have a production company now that we’ve started that is a parallel company to those that do reality T.V. and we’ve got four shows in pre-production from that, so we’re a new media integration ecosystem. Essentially what we do is we manufacture content, we distribute it, and we market it. Some of that we do through strategic partners, and some of that we do with new divisions or companies that we’re launching underneath.
Andrew: I see. All right, here’s the money shot. How much revenue did you guys bring in last year?
Chris: We did 482 in 2010 from a dead start, 635 last year before the buyout. We actually had close to 800 and then I had to give up about 150 of that in receivables as part of the settlement.
Andrew: I’m sorry. I’m not following. What’s the buyout?
Chris: The partner. The guy that I mentored that I started No Limit with sued me on the 30th of September kind of out of the blue.
Andrew: Of 2011?
Chris: Yes. So we closed the year 33 1/2 percent up from the year before. We closed the year with 635 and about 59 in [??], but we gave away…
Andrew: Wow. So in 2011 you brought $635,000 in revenue, $59,000 in profits, but five months into the year you had to buy out your partner, which cost you how much?
Chris: It was a total package of about $165,000 all in cash and receivables. We gave up two of the contracts that would have hit before the end of the year totaling about 120, and then the rest was cash.
Andrew: I see. So the partner gets the contract and he does business for those two clients. You don’t have to give him cash. You give him a contract worth that much.
Chris: Yeah, that was closing before the end of the year so 635 was net of the 150 that we gave them. So we would have come in around 800. So we would have almost doubled revenue from the year before, but we ended up doing 635 instead.
Andrew: And this year you guys already have contracts in place?
Chris: This year we will probably come in right around 1 to 1.2. Somewhere in there.
Andrew: 1 to 1.2 in million.
Andrew: So, I’m on the website right now, and…
Andrew: Yeah, I’m so glad you said that because I wasn’t sure how to come up with the right way to say it. What’s going on here? Tell me.
Chris: It’s horrible. It’s horrible. Well, what’s funny is that the first six months we had the company, we didn’t even have a website. And as you know now, we were bootstrapping, so we needed to be very specific with where we put the resources and what was driving sales and what wasn’t. And the website that we have right now is in redevelopment, but it’s been one of those things that with the buyout and everything else, there were budgets that got wiped out by that. They have not yet been able to be replenished, and so we’ve been delayed at upgrading and really messaging who we are on the web as effectively as we would like. So again, sometimes you get caught with your pants down and the only thing to do is move forward and do it. What’s fortunate is, we’ve got a strong referral base of authors, and what we actually deliver is so competitive in the market that we’ve been able to, we haven’t lost any deals because of having an underdeveloped web presence.
Andrew: But it’s a WordPress site, and it looks like there are some areas that need some love.
Chris: No, no. There’s a massive need of improvement, and again some of the things that happened, this is just to those listening who ever end up in these positions, it’s a pain point. So I have no problem telling you guys it’s a pain point for me. It bothers the hell out of me. What really bothers the hell out of me is that the guy who we bought out was charged with developing the website for the last two months, but instead of taking any of those ideas and implementing them in some of the team that was now in place, he waited until he was bought out. And then lost a competitive company that we’re now having to have some legal action with because they are using some of the assets that [?] and using them as their own. So, in other words, the website that we want is actually now a competitor’s site.
Andrew: The website you want that you were supposed to have built internally is now being built by your competitor.
Chris: Which again, you just kind of have to roll with it.
Andrew: Yeah. Now, you’ve got no more partners. It’s now all you, no more agita [SP].
Chris: No more partners like that, no.
Chris: We’re actually strategically in talks right now with a couple of companies that have really unbelievable technology via learning space, and so it is likely that. We are a partner-built company, but we don’t have the partner in the entity structure. We can partner on the [?] side if that makes sense.
Chris: One of the things that Trump’s done really well, I remember reading about this about a year and a half ago, is he said, “I’ve never had a partner, but I’ve had thousands of partnered deals.” So in other words, inside the Trump organization, there’s family, but every deal Trump does, everything he does, he’s basically got a multitude of joint ventures or partners. So I think that philosophy is one worth mimicking, and we’ve kind of been able to do that moving forward.
Andrew: I’ll tell you whose developer, whose site designer you should go for is whoever did Dan Blank’s site. He runs We Grow Media, which is a…I guess he’s building an author platform, he’s helping authors get published. His site looks fantastic. From what I know about him, he probably was able to get a deal from his designers. We Grow Media. He’s doing what I guess you guys were doing back in the day where he’s teaching authors how to get published.
Let’s see what his website says. Join me and a group of writers for an 8-week online course that will build the platform you need to establish an audience for your writing career. Maybe he can even use a partner like We Grow…
Chris: The unique difference for us with our model is that there are a lot of people teaching people how to do this, but the challenge is that authors don’t want to necessarily run a publishing company. Authors want to be authors.
Andrew: They just want someone to handle it for them, and that’s what you guys do.
Chris: They want a fair deal, they want to make more money, they want to do their books, they want to speak, they want to sell seminars, they want to do whatever they want to do, and they’re willing to self-publish or do whatever it takes to get there. But it doesn’t mean they want to or that they should. It’s like anything else. So when they go learn about other stuff, it actually helps our sales cycle because now they are more educated and they have some seller recognition for the disparity in the market.
And when we show up and say, look, we actually partner with you, we treat you like a portfolio company, and you now leverage a publishing company with distribution with all these different things that you don’t want to be dealt with that is minutia at some level. You don’t lose your flexibility, your higher royalties, or anything else, but you gain someone who has the infrastructure you don’t want to build but that you’ll need to build if you’re going to be serious. And that’s been a really unique differentiator for us, and yeah, we’ll have the website up and running. Our office suite that we’ve moved into now, we share it with incubate.com, which is run by a friend of mine who just sold his company to the largest digital agency in the world and now is incubating e-businesses.
So a lot of cool things are happening over the next couple of months with our ongoing messaging and outbound stuff. But it’s like everything else, startups are startups. You fight the battles you can fight and you prepare for the ones that are coming, and you just keep growing if you can.
Andrew: Let me do a quick plug here, and then I want to ask you a question that I know has been on people’s minds since about [mid] 20 in this interview.
Here’s the plug, guys. If you’re already a Mixergy Premium member and you’re hearing about how Chris built up this online course, Chris did well and funded his business, and you’re thinking, hmm, I’d like to do the same thing, well, on mixergypremium.com, Greg Rollett teaches you how to create your first educational product. He shows you how to come up with the idea, how to package it, how to sell it, how to generate revenue from it. It’s right on mixergypremium.com. If you’re a Premium member, it’s part of your membership.
If you’re not, at this point it only costs…I won’t even say the price because we’re going to increase it, but I can tell you it’s substantially less than $240 which makes me feel like, boy, if that’s what Chris was charging, I should aspire to do that instead of our very low, monthly rate. And of course, if you join now, that low rate will stay with you forever. So Greg Rollett’s course is the one I would recommend as a follow-up to this interview.
I’m going to also tell more people to check out Timothy Sykes course on how he generated $3.3 million from blogging. He talks to you about the whole path that he took to build up his business and he teaches you how you can do it too. The reason I recommend him is because he’s kind of a, he’s a feisty guy and you’re going to see…actually, you know what, I’m just going to leave it there. Check out his if you’re willing to take a not safe for work type of course on Mixergy.
Greg and Tim, thanks for doing those courses, and everyone else, check out mixergypremium.com.
All right Chris, here’s the big question. I know my audience, and they’re thinking, how do I know that he’s not puffing up his success right now the way that he did back in the early days?
Chris: Yeah, that’s good.
Andrew: You’d think the same thing if you were sitting in the audience and you suddenly heard that you were doing $1.2 million this year and $800,000 last year. What’s the answer to that?
Chris: The answer is I don’t have any, there’s no value in puffing up to me, and I’m not trying to sell anybody anything. So I really don’t care, I guess. I mean, Parallel 6 has done well. We’ve got a couple of…we’re in the early stages of divesting that. I talked with David the other day, and I think the valuations have come in somewhere between, five, two, and six, and the plan is to exit that this year. You know at this point my holdings have been diluted, so it will be a nice six figure take for me, but I’m not going to retire-type of thing. So, I guess that’s one thing, I just told you exactly what it will mean to me.
And then, with no limit, we can do far better than that and we can do slightly under than that, candidly, between now and the end of the year. And why I say that is because there’s a couple of deals in place with this white label book shelf that we are launching and some other things that I don’t know how well they can go. I know that they can go very well because of the data base that they are drawing from. So, what I’m speaking one to one to, that’s based on kind of what I can see in the dashboard that is predictable and that if we hit it, I will consider it a monstrous successful year considering we just came out of seven months worth of legal fights and …
Andrew: Right. Right.
Chris: … all kinds of crap. So, to me I will be at a double on the year prior and I will be ecstatic, quite honestly. If it comes in a little lower than that, then we still group and if it comes in way better than that, then, you know, I got lucky for once. So, again, I think that the interest is… I’ve got nothing to prove to any of your audience that I haven’t already done and I just love playing this game. I’m finally glad we have some numbers to share. I don’t think they are that great, quite honestly. I think they are indicative of we’ve done some things right, but I think we have a long way to go.
Andrew: All right. The website is, anyone who wants to go check it out, it’s nolimitpublishinggroup.com.
And by the way, where is it, Dennis of Reedge who did a course on conversion optimization in the comments said, “Look, remember the course we did on conversion optimization, I get people thanking me for it by email. That is so cool.” So, the reason I say that is because when the audience says thank you to a guest , they notice it. They are aware of the people who say it , they are appreciative of it , especially after they put themselves out there and as open as Chris has been here. So, if you got anything out of this interview, if you appreciated his openness, for some reason in my head it sticks out the tampon situation…
Andrew: … if any part of this sticks out in your head and you appreciated it and you learned something about how to turn things around for yourself, there’s an easy way to reach out to him, you just go to nolimitpublishinggroup.com and do what I am about to do which is say, Chris, thanks for doing this interview and being so open and teaching us what you have learned from our experiences.
Chris: Well, I appreciate your efforts, and I think what you are doing is great, I think it is needed. I wish it had been around earlier in my career, honestly. Because very few places are where you can get people talking real and at the same time explaining what they did where you can learn and implement some of their own strategies into your business. I think what you are doing is awesome.
If someone does want to reach out to me they can go to chrisjsnook.com. That’s actually where they can find out about everything from not only No Limit, but also me directly. So, that’s a good site to go if you want to remember something simple and that one is a little bit better developed …
Andrew: More polished?
Chris: Yeah, right. I definitely appreciate it and thanks for the time.
Andrew: You bet. Thanks for doing this interview and thank you all for watching. Bye.