Andrew: Three messages before we get started.
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Finally, do you need a lawyer who actually understands the start-up world that you and I live in? Go to walkercorporatelaw.com. I’ve known Scott Edward Walker for years, so tell him you’re a friend of mine and he’ll take good care of you.
Here’s the program.
Hey there freedom fighters. My name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. The place where proven entrepreneurs come to tell you their stories.
And in this interview we’re going to find out how a guy with no internet experience ends up building a three million British pounds business.
In April of 2001, John Sollars, who previously had failure after failure, ending up founding stinkyink.com, an online SUPERstore for printer supplies.
I told you before, by the way John, I’m experienced in yapping and here I go and make a fool of myself in my own intro, which I wrote.
Here, let me finish it up.
So stinkyink.com sells ink cartridges, toner cartridges, ribbons, and photo paper, and John, thanks for being here.
John: My pleasure.
Andrew: You guys celebrated your tenth anniversary this past April.
John: Yeah.
Andrew: What were your annual sales at that point and how did you guys celebrate it?
John: We ended last year at just over three million. I think more than the level of turn out, the fact that we’d achieved 10 years in business was a big, big milestone for me.
I think that, well from my previous experience, the majority of small and mid sized businesses cease trading within three years, so to get through that three year period and then to go on for 10 years was a real [inaudible], a real major milestone.
So I took everybody out, we had a big party and celebrated because these are important – the numbers I made, it’s almost irrelevant. Three million pounds, 10 years, but it’s only when you look back at 10 years and where you’ve come from and what you’ve achieved in that period that you have the chance to reflect on it, and it’s a milestone. It’s a real, real achievement, I think.
Andrew: Huge milestone, especially for an internet based business, and especially for an entrepreneur who had, like I said before, a couple of set backs. What was the first company that didn’t go so well that you launched?
John: My first business was in 1982 and prior to that, I was at sea. I left the merchant navy and set up a shop in my local market town selling CB radios, which were very new to the UK at that time, and electronic components. That lasted about two years. Looking back, the problems I had there were underfunding. I was in a niche marketplace in a very small catchment area, and the market was saturated, so I couldn’t make a living. So I closed it down and went and got a proper job.
Andrew: This was Waybands – a proper job – this was Waybands, the name of the company?
John: Yeah, yeah.
Andrew: And you sold CB radios out of a storefront?
John: Yeah.
Andrew: I see. So I see what you’re saying. How many people are going to walk down the street, see a CB radio shop, and say, “I should go get one of those.”
John: Sure, yeah. I mean, it was a small market town and the catchment just wasn’t there anywhere big enough.
Andrew: What was your attraction to CB radios? It seems like it comes from your background as a merchant marine, right?
John: Sure, I was a radio officer, on communications, so I understood Morris code and the whole frequency, and all that sort of stuff. CB was the bottom end of the market [inaudible]. We – my friend and I who started the business – we understood the technology, we were out to repair the rigs, and that’s what got us into it, really. The technical part of it.
Andrew: Okay. By the way, do you happen to have something on your desk? It seems like when you move your hand down it makes an odd sound.
John: Sorry, yeah, some paper. I was going to tidy up, but you can’t see –
Andrew: No one can see it anyway. All we see is a nice clean background.
John: Hey, why bother? Right.
Andrew: You know what? I see your face when you talk about it, and you’re still feeling the pain today?
John: Andrew it’s a learning curve for me. I write a lot, and I try to look forward rather than back. Everything I’ve done in my life I’ve not regretted, and everything I’ve done I’ve learned from. Some things have cost me a lot.
Andrew: It’s that sound, by the way, when you’re moving your hand down, there’s a sound. What is that?
John: That?
Andrew: No.
John: That?
Andrew: There, that’s it.
John: That’s just me being passionate.
Andrew: OK, so when you move your desk I guess the mike does something strange. So you were saying how you felt then.
John: Is that it, that’s my chair.
Andrew: No, no, that too though but that’s not what we heard before.
John: Right.
Andrew: So, you were saying that you still feel the pain of it.
John: Yeah, it’s failure, isn’t it? There’s not many people who’d stand up and say I’ve failed, I’ve been a failure. I have and I’ve done it and yeah, there’s pain there. But you’ve got to move on, you’ve got to take the lessons from it and apply them and the beauty of the internet is that you’re not restricted into a small area, your catchment area is the entire country and Europe and the U.S.
Andrew: Alright, then you started another company, Universal Electronics, what was that and what happened there?
John: When I closed Bayfunds I tried selling electronic components and one of my customers went into liquidation and myself and two colleagues decided that we could do a better job than the previous management and bought them out of the administration. This was a small business making subcontractor assemblies and monitors. That was 1991. 1992, we went bankrupt, the bank foreclosed on us and I became a corporate statistic.
Andrew: Meanwhile though, you had a personal guarantee on the debt that you guys took as a company. You and your co-founder. What happened to that debt as a result of your personal guarantee and what happened to your co-founder?
John: In the UK when you start a business you have a limited liability but the banks always want a personal guarantee. Of course you’re quite happy signing personal guarantees because you’re convinced that you’re going to be the greatest thing ever and you’re going to succeed. So myself and the partner both signed the personal guarantee but when everything went wrong the bank came after the guy who’s going to pay the money, and I got lumbered with the entire amount because my colleague wasn’t working.
When I finished, I got myself a job and continued working. So they came after me for the full amount. Personal guarantees and me don’t get along.
Andrew: Unreal. And there was nothing you could do to get him to take a job and to pay part of this? We’re talking about, let me see here in my notes from your conversation with Jeremy our producer, 40,000 pounds is how much you guys took on in debt that you personally guaranteed. You couldn’t get him to do something about that?
John: I never heard from him again.
Andrew: That’s it?
John: Yep, absolutely.
Andrew: Wow. In over 20 years now, you still haven’t heard from him?
John: No. Move on Jeremy, sorry, Andrew. Move on.
Andrew: Alright, OK. Fair enough. Let’s see where to go, alright, I’m going to move on. Then, you go and get a job.
John: I have to get a job, I’ve got a family to feed.
Andrew: How big a family did you have at the time?
John: A wife and two children.
Andrew: OK. So you have a wife and two children, you go get a job, and then at some point you say to yourself, I need to go back and be an entrepreneur.
John: I know, somebody shoot me.
Andrew: Why do you have to be an entrepreneur? You’re getting jobs, you’re doing OK for yourself.
John: I’m a good salesman, I can sell things, I can get a job. The problem for me working for somebody else is that you can not use your creativity. I get so frustrated, the only way you can really channel that creativity is doing your own thing in your own business working for yourself. I’m a great believer than an entrepreneur is at heart a creative person. Last year I was talking to someone and he said what do you do for creativity, do you play the guitar or sing? I said no it’s my business, it’s my life.
He couldn’t understand that working gave me the creative boost that I need as a human being. For me it’s the most important thing in an entrepreneur’s psyche, the creativity. It drives my business forward. Some days you become frustrated because all the ideas come from yourself, but, hey, if your ideas were coming from the other guys, they’d be doing it and not me. So it’s that creativity that’s so important to me.
Andrew: And I could see your creativity, by the way, as I was researching you. I looked to see what people were saying on Twitter about StinkyInk, for example. I saw recently Nicola McLean (sp) on Twitter said, ‘I just ordered my printer cartridge from @StinkyInk. Love how on the bottom of the receipt email it says, “John Sollars, Benevolent Dictator”. So in all of these little places where most people would just be very corporate, you add a little bit of personality.
John: I don’t like being corporate. I like to be a small business. I think it’s important that you treat everybody – we have 156,000 customers on our database; we have 350 schools and 200 or 300 businesses – but we treat them all with exactly the same attention and care and respect. That’s down to me and the way I believe people should do business. So it’s about treating people the way I want to be treated.
Andrew: So where did the original idea come from for StinkyInk?
John: It was back in probably November 2001 or October 2001. I don’t know whether or not you remember this, I’m sure, you go back to the year 2000 when the dot-com bubble was going mad and everybody was getting huge payouts and cash burn was the key phrase. I was working and we had a business that was organizationally such that we could deliver products anywhere in the country the next day. But it was into businesses, it wasn’t a consumer product. So I’m thinking to myself, ‘How on earth do we get part of this internet action?’ We went to London for a long weekend with the family, and everywhere was advertisements for dot-com businesses. You go down the Tube, and you know the long escalators down the Tube, and every advertisement, all the way down, dot-com-this, dot-com-that. How on earth do you remember these people? You get out the other end and on the back of the cabs and on the back of the buses, it’s dot-com-this. Everything was dot-com. I can see this happening, and it all imploded, didn’t it? Huge amounts of money were lost. The thing that really had me excited about the opportunity there, in October of 2001 my daughter came down and said, ‘I’ve done all my shopping, all my Christmas shopping.’ She’d done it online. Of course at this time, this was dial-up mode. You remember. This was a big deal at this time. Then a couple of weeks later I’m looking for a printer cartridge with my son, and that’s where it all started really. I was a sales director for a decent sized business, 12 million pound in 2002, so a decent sized business. I gave it all up to do it myself. You can imagine the conversation I had with my wife.
Andrew: At the time, weren’t there people who were selling ink cartridges online? Couldn’t your son, if he wanted an ink cartridge, just go onto any number of websites and say, ‘I need a new ink cartridge; here’s my printer; send it to me?’
John: Andrew, the internet is an integral part of our life now. Years ago I got in the car and drove to P&T World and Staples looking for these cartridges and they weren’t there. It was only later that I got the old dial-up modem out and plugged it in and went online and tried to look for it. That’s the difference between now and then. Now it’s integrated into everybody’s desktop, onto your phone, onto your tablet device, it’s everywhere. But then it was an effort to go and actually dial into it and dial it up. Yes, it’s a different world.
Andrew: So you’re saying it didn’t exist back then?
John: No, no, no. There were people there.
Andrew: Or you just didn’t know about them?
John: Yes, absolutely.
Andrew: I see.
John: And when I started looking I appreciated the size of the opportunity there, which was a good move, to be honest.
Andrew: How did you know it would be a good size opportunity? I remember actually looking at ink companies back then and they were doing phenomenal business. I’m pretty sure that the company behind MySpace, before they launched MySpace was in tons of businesses and ink cartridges was one of those businesses because there was so much cash in it. How did you know that there was money in it?
John: I looked at what Amazon were doing and the beauty of that business, in the old days when Amazon used to sell books and CDs as it was, easy to pack, light, easy to post. I was looking at something along those lines. (?) look at ink cartridges. It follows the same technical requirements, doesn’t it? It’s light. It’s easy to pack. It doesn’t cost much to post. So, the whole thing just came right.
Andrew: OK. But because Amazon’s doing well on books, that doesn’t give you an indication of how big the ink market is and I’ll tell you why I’m curious about this. A lot of people in my audience, and I too, will have ideas for businesses and will wonder, “Is this going to be big enough? Is the opportunity worth pursuing?” Ink, in the early 2000’s, was clearly a big opportunity worth pursuing. How did you know that? How did you analyze the market? Or did you? Or maybe instead you just said, “Hey, this looks like an opportunity. I’ll try it and see.”
John: Oh, well it was that really. It looked like a huge opportunity. It looked like, when you start investigating the number of printers and the cartridges and the competition. And then you then start looking at… We went to a presentation, my wife and myself. And, oh my gosh, HP stood up and said, “The European market for consumers is four billion pounds. The UK is about half of that.” So, a portion of that will do for me. You know?
Andrew: I see. All right. So you see how big the market is. Now its time for you to get the ink cartridges, to launch a site and then later on we’ll talk about getting customers.
John: Sure.
Andrew: So, how did you figure out where to get the supply, to get the ink cartridges?
John: It’s a tough deal to start with. These days people ring me up and say… In the early days it was a real crawl through distribution trying to find people who actually sold the things. Of course, with no trading experience everything is done on your own credit card. There’s no credit facility involved, so you’re buying. My first stock order was in two cardboard boxes in my garage. I actually sold my family’s caravan to finance the purchase of four thousand pounds worth of stocks. So you know it was that sort of a deal.
Andrew: All right, what about the website?
John: The website. My son was into the internet and he was still a teen at the time when I started this. And he looked at he and me said, “You really don’t know what you’re doing.” He said, “A product you know nothing about using a medium you don’t understand. Should you really be doing this?” Which I thought was really astute for a thirteen year old. He’s grown to like it in the years since then.
Andrew: So your son built the first website?
John: No. We started the website using a package called “Actinic”, which is basically a database. And the guys who were supporting that for me did the first design for me. So they did the hosting. We’re still in touch with them. We still use them. So it’s been a long-term relationship. They did the very first website and then my son then did the next design and the next couple of designs after that.
Andrew: I see and he’s still now manages the design of the site?
John: No, no. He lives down in London and he’s a software engineer.
Andrew: He’s done. He’s moved on.
John: Yeah. That’s right. He’s earning more money than I was willing to pay.
Andrew: What did the first version of the site look like?
John: It was a nightmare when you look back. Very clunky. I mean, but again, back in 2002, it was all dial-up modems. 64kb. You know it had to be really quick loading on a dial-up connection. So there wasn’t much in terms of graphics in there. There was some drop down menus for navigation. It was really most basic.
Andrew: I’m going over to the site right now to see what it looked like.
John: If you go up to…
Andrew: On archive dot .org, I see…
John: Yeah, that’s it. Yeah.
Andrew: April, 2011. Best printer consumables on the net. Coming soon. Before you even launched you were taking the mantle of greatness. I love it.
John: Well I think we tried to deliver on what we preach.
Andrew: And then soon after that I see the site is up. Actually you know what? Based on your description I thought it would look awful but its not. I can make out the options here, all these ink cartridges. I can also see that you’re selling memory sticks and cables. What happened to that part of the business?
John: Well, of course I come from an electronic components background so I understood memory. The issue there is, that as prices crashed, which they certainly did very quickly. You’re left with stock on the shelf with the old price. I got burned. So we got out of that. We still sell a few cables but you know. To my mind, it’s about focus onto what you’re good at. I started this business in 2002 knowing nothing about printers and ink. In 2012, I think I know a lot. So what we do, we focus on what we do and we really try hard to provide good service for our customers.
Andrew: All right so we talked about the product a little bit. We talked about the site. What about customers? How’d you get your first customers?
John: Oh, that was difficult. Again, you put your website up and you expect things to happen, don’t you? It doesn’t work like that, does it?
I got this website open, I spent all this money on it and I was expecting ultimate crowds off it, so nothing much happened. Then we started getting some links from shopping sites and trickle orders started coming through. This is good, its getting better, I’m still paying for everything with my credit card at this time, over a six or seven week period around 2,000 pounds a day.
Then I ran out of principle on my own personal credit cards, so I had to stop that. So I rang the card processor, World Bank, they took four weeks to pay the cash at the time. I asked “Can I get some cash off you” and they looked at [??] and said “This is a little bit dodgy. we think you should try to refund all this because you’re going to get charge backs for them.”
So we looked at the [??] and most of it was absolute rubbish and fraud. I sold 2,000 pounds of stock and hadn’t got paid for it since then. And I had debtors on my personal credit cards.
Andrew: So even though you shipped out the product, it ended up that the credit card charges were fraudulent. So you couldn’t get the money from your processor but you’d already shipped the product out to your “customer”.
John: Yes.
Andrew: So these are people who are just finding credit cards. What was the hustle there? What were they doing to you?
John: Well, its really difficult to spot because it wasn’t just one person or people locally, it was all over the country, whatever you get. There must have been some communication between them because they just piled into it, everyday we were getting these orders. At the starting point you can’t tell what’s fraudulent and whats not can you?
Andrew: No.
John: Its all part of the learning process. That was a time a tough time. It had been about a year putting this altogether now and I was [??].
Andrew: So if I understand this right, what probably happened is someone used a fake credit card, or fake credit card number. maybe it was even a real credit card that they got from someone else, bought from you and got the ink for himself. Then told his friends “Hey, look you can get free ink from this guy because his checkout process won’t catch you if you use a bogus card.”
John: Yes, sure.
Andrew: That’s it.
John: I think there’s more to it than that. I think they were buying more.
Andrew: What else was going on? I want to understand because we’re all potentially subject to fraud if we’re selling online.
John: The issue, obviously as a retailer, is a [??] present transaction. Over in the UK and I suspect the same in the States, if somebody takes your credit card and uses it fraudulently online, you get your statements and you ring the bank and say “I didn’t buy that product from this person.” The bank charges it back to the retailer, so as the retailer, you’re totally responsible for that fraud essentially.
So I bought and paid for this product on my own credit card and had no cash coming in to pay those off.
Andrew: Was it $60,000 in transactions that were fraudulent?
John: 32,000 pounds, yes.
Andrew: 32,000 pounds, $60,000 US, wow unreal. So why didn’t that just knock you out of business?
John: It did knock me off my feet for a day or two. It was tough. It took me, probably, a week to realize the actual enormity of it.
Because again starting a business you’ve got no rapport. There’s nothing behind you, these days if the balance sheet is stronger the business is stronger. Back then there’s absolutely nothing. All you are is minus 32,000 as a starting point. It was very tough time. I had a very long conversation with my dog and we decided I should carry on and so we did.
Andrew: Did you have enough money to continue the business on your own at that point?
John: No, I had to remortgage the house to pay off credit card debts. The focus isn’t mine. The bigger issue for me then, going forward was balance sheet was very weakened for three or four years so I couldn’t get credit from suppliers so you’re living hand to mouth and paying on credit cards again.
It took three years to clear through that and strengthen the company’s balance sheet again and to get credit from key suppliers.
Andrew: You mentioned when you started your 3rd company, you said “You can imagine what my wife thought of that.” I’m wondering now what your wife thought when after starting a 3rd company with 2 failures behind you, you ran into trouble and you mortgaged your house? What was that conversation like?
John: Oh sure. It wasn’t the easiest conversation if you will, but she stood by me and we carried on. [??] As I said to you earlier, I’m a good salesman, I’ve got good [??] and I’ve got myself a job and got back into the woods. Once I had a years worth of data base building, now I’d be working 7 days a week, 12 to 14 hours a day, [??] data base books and getting information online. You just can’t push that down the drain, can you?
Andrew: Wow, right, so you’re already invested all this time and money into it, you had to see it through. You had to a big set back but you were going to find a way to over come it and you eventfully did by finding customers.
How did you get customers?
John: Well from day one, I was always committed to search engine optimization with Google. That’s still my bank to market these days, [??]. Its all about optimizing the website and so I was reading about that and was just trying to understand how to get it optimized. [??]
It builds up gradually. We get about 100 to 150 visitors a month these days, but that’s built up over a long period of time.
Andrew: How did you know that search engine optimization was going to be your place to find traffic? At the top of the interview, you mentioned that you didn’t have much internet experience. I think you said you had zero internet experience.
John: I didn’t Andrew, I stumbled across it, almost by accident. We were doing some type of pay per click with Google and probably 500 pounds month of me, that was a lot of money in those days, then my credit card expired. I missed the date that it expired and it was a week before I realized we weren’t getting any traffic from pay per click.
I realized it didn’t make any difference, we were still shipping out the same amount of product, I just wasn’t paying out 500 pounds a month to Google. We’ve done [??} we do Ram protection and stuff.
It works for me on the SEO side. Its about reading books and trying to understand and learn.
Andrew: What did you learn?
John: Well, I learned as I was doing it.
Andrew: What books and resources did you learn from?
John: Honestly, I can’t remember now.
Andrew: OK. So there wasn’t any one place that stuck out for you at the time. It was just constant learning.
John: Yes, absolutely. I was trying things and doing things and seeing what results we got. One thing I did learn every early on is the changes you make were quickly indexed by Google and the end result was quickly obvious. So if you did something wrong you could see it and correct it and go back. It was constant evolution. I’m a great believer and always have been of constant improvement. [??] My whole business I insist on quality [??]. Its all about constant improvement. Being efficient and improving, that’s been my philosophy since day one.
Its a learning curve.
Andrew: Tell me a little bit more about your learning style. What I find when I read the Tech blogs is, they all talk about is an Android phone better than an I-phone, is it better than a Window’s phone and other bogus arguments. Most real entrepreneur aren’t spending hours arguing over which I-phone or Android phone they should get. They are spending time thinking about where do I learn, what do I need to learn to build up my business and build myself up. So talk a little bit about your style of learning and how you do it.
John: That is really difficult. I always look at my business and the processes and I am always looking for the next kick on, the next opportunity, different channels to market. I really work hard.
I’m aware that in the past, I’ve closed my mind to an opportunity and it’s gone past me. So really work hard to keep an open mind, and listen to what people are saying. I read a lot, I write a lot as well. It’s really about keeping an open mind and absorbing information from whatever source I can get it really. There is no structure to what I do. It’s driven by creativity, my inner drive to improve and be better.
Andrew: You told Jeremy that to protect yourself from credit card fraud you use something called the Third Man for fraud credit monitoring. What is that? How does that work?
John: The Third Man was set up by the same [??] that I was set up. It’s actually on my MasterCard now. They run a database of card information basically. They match every card transaction that we get on our website against our database, and they give us a ranking. If it clearly goes through that’s fine, but if it doesn’t it stops and we don’t ship it. We’ve had one charge back in the last 21 months. So it works well for me.
Andrew: Is third man a credit company?
John: No, its a risk assessment if you like.
Andrew: Risk assessment company?
John: Yeah.
Andrew: OK. And it’s called Third Man?
John: Yeah.
Andrew: OK. Let me look them up.
John: It’s UK based. It’s owned by MasterCard these days. I’m sure there is something equivalent in the States.
Andrew: The connection was going in and out, you are saying its a British company?
John: Yeah.
Andrew: OK. So you grow and grow and grow, and in 2009 you suddenly have another growth spurt, which causes some problems. How did you get that growth spurt in 2009 seven years after launching?
John: We’ve growing steadily. We built it up to about a £1 Million in turn over, and then 2009-2010 we grew 60% both years. It caused huge problems in the back end of the business.
Andrew: How did you grow so much? What did you do differently?
John: We changed the website. We focused a lot on conversion rate optimization. We were looking very much at the customer’s trip through our website, in terms of placing the order, and trying to improve that. We expanded the database quite enormously so we were getting a lot more index pages on Google and getting more traffic through that way. Basically just doing the basic things. Keep doing them. It’s just hard work isn’t it? There is no magic wand you can fling at these things and say, “Hey, I’m going to turn over 60% more next year.”
Andrew: What did you learn about conversion rate optimization through your experiments?
John: That’s on-going. It’s a constant on-going part of our SEO, it’s the CRO. Everything we do we try to test, and then the improvements you can see, and you apply, and you test again. It’s constant improvement. It’s real work activism and keep trying to improve.
Andrew: I’ll tell you what I learned recently. In past interviews I’ve said that if I put a shield on e-mail collection form that says “No Spam Guarantee” I increase my conversions, and more people give me their e-mail address. Even if its my own, made-up, shield and there is no organization that it to me, more people gave me their e-mails and we increased our conversion. Then I talked to the founder Optimizely who did a course on Mixergy. He said “Andrew, try getting rid of that spam shield, because it scares people off.” And I thought, “No, I have data that proves that it doesn’t scare people off, it gives them comfort.” But I tried not just that, but all the different tactics that he said, like getting rid of everything that is in the way, just really focusing people on the form. Suddenly my conversions went from 13% to 24%. 24% of people who come to Mixergy.com for the first time are shown an e-mail collection box and give me their e-mail collection box, and give me their e-mail address. What I learned from that was that small improvements could change the one page that you’ve got, but try a whole new design, with a whole new mindset, and a whole new set of ideas, and then test that against the original. That should be obvious, but sometimes I need to hear people spell things out for me before I actually do them. Can you imagine 24% of people give me their e-mail address now, and join the Mixergy community, and return back to the site, and watch our interviews, and so on. That’s fantastic!
John: If I had a 24% conversion, Andrew, I wouldn’t be here.
Andrew: But you’re selling.
John: That’s not to bad!
Andrew: That’s the difference though. You’re selling; I’m just giving out information. I”m giving out interviews like this.
John: We’re just under 5% conversion rates.
Andrew: So, was there anything like that that you learned, that might seem obvious to you but when we hear it again, it’ll actually be useful to us or remind us of the importance of doing it?
John: I think you’re absolutely right. I think you can over test small changes. You need a big change to see a big difference, but it could backfire and kill you, couldn’t it? So, you have to be careful about those big changes.
Andrew: OK. Did you have a backfire at some point?
John: Not really. Last year and this year we’ve been steady, we grew. Obviously, the marketplace is tough at the moment. We grew 5% last year, and we’re going to grow between that and seven, so there’s some growth there. I’m hoping that there’s a couple of thing I’m playing with at the moment that will make a big difference next year and maybe, give us another one and a half million pounds, maybe even two million pounds worth of extra business. So, next year should be an interesting year for me.
Andrew: Hopefully, we’ll have you back to do another interview. We’re not done with this one though.
John: I might be absolutely exhausted by that time.
Andrew: So, let’s continue with this one. You talked about things that you did to increase your sales, roughly in the 2009 period; conversion rate optimization, improve the design of the site, add more products so that there’s more for Google to index and more reasons for people to come to your site. Most people would think that kind of growth would be fantastic, but it could also be a problem. Why was it a problem for you?
John: Well, the big issue then is if your logistics on the back-end is configured for a server that’s [??], and you suddenly go through the roof, you’re running to catch up, aren’t you? So, we had a real issue in the summer of 2009 when I got sick, I’ve got people off on holiday and I’ve got two people working in our stores and we were working until 9:00 at night. Every time you picked the phone up, there was somebody on the end complaining because their product hadn’t arrived or it was the wrong one. So I said to myself, “It’s never going to happen again.” So we’ve focused and got the back-end sorted out, and we put a real slick operation in place. We can cope now. We can cope with it. We’ve actually turned our own planning in our head with what I’ve got in terms of overhead systems without any problem at all. One or two people might get tired in the stores, but that’s good.
Andrew: So when you say the back-end couldn’t keep up with it, you mean the people who physically took the ink and packaged it and shipped it out to the customers. I see, it wasn’t a software issue.
John: No, no. It was a people issue. It was a managing stock issue. It was reordering stock. It was the whole back-end which had to be kicked into shape.
Andrew: Yeah, that’s a good point. A lot of time as entrepreneurs we walk around thinking, “What would happen if I failed? How do I explain this to my friends? How do I cover this up from my enemies?” This stuff goes on in our heads. What we might need to spend a little more time thinking about is what happens if this blows up in a good way. What happens if we suddenly get a lot of orders? Let’s just fantasize for a moment. How do I get more people in the door to help me? How do I get more orders processed? In your case, your son and his friend who were away from school and they helped you out.
John: Yes, yes. In fact, his friend is still working for me now. [??] Yeah. It was a good kick of the ass to say, “Get these sorted here.” And so that was the real key then was to get the right people in place, get the right systems in place.
Andrew: Talk to me a little bit about that, if you don’t mind, John. I wrote down actually the word “systems. It’s very unsexy. Most people would just pass it up in an interview, but I’ve got to jump on that like a dog and say, “Teach me.” How did you change your systems to allow you to grow your business?
John: Well, the first thing is look at how we were integrating because at the time we had the website as a separate database. We had the back office system as separate. I think from memory we were then transacting manually between the website and the office system. So the first thing we did was integrate the two and then start looking at a package that would do the job a lot better, a lot more efficiently. So a big investment in looking at new products in terms of the systems and then bringing them in because if you’ve got a business and you change your system everybody hates you. I had people in tears for weeks after we changed. Oh, it was a bloody nightmare, but it had to be done. [??] And these days it works really well, but it took me a year for certain people to admit that the system actually made their life better because that change, it’s so difficult to manage.
Andrew Warner: What was their frustration with the new system? It seems to make sense to me. In the past you get an order that comes in on one site and you have to manually move it from this one software product into the shipping product. What were you doing, copying and pasting the order?
John: Yeah, yeah.
Andrew: Copying and pasting, so, but in reality it’s not so simple. What are the issues that changed people’s lives that made them balk at a change like that?
John: I think that, people don’t like change. That’s the real issue. And it’s, I probably, my failure was not involving them in the decision making process. I imposed this change on them. I said, this is good, we are going to do this. On September the 9th we are throwing out the old and bringing in the new, bang, so we did. And I hadn’t involved that, I hadn’t motivated them. They were just suddenly instead of having a reasonably comfortable like they were suddenly, I’ve got to learn all these new systems. It was a, that was me not managing my team well.
Andrew: I see, that’s a good point. Let’s see what else there was then. You grew and grew and grew. There was a time when you didn’t have, if you didn’t have an ink cartridge for a customer what would you do if you needed to satisfy them? I think the audience needs to hear that.
John: There was days if I didn’t have the goods in stock I would literally drive down to my nearest Staples and buy it from Staples and ship it that day. So I was really committed to customer service. I wouldn’t go quite that far these days.
Andrew: Because you’re not.
John: I tell a lie. We would to be fair, I mean we are shipping goods from suppliers on next day deliveries and it’s automatic, I wouldn’t go and drive to Staples anymore.
Andrew: You know in a moment I’m going to talk about my, what I sell at Mixergy, but one of the things that stands out for people who hear my product is that there’s recurring revenue because it’s a membership based product. For you when you work hard and you satisfy a customer by even going out of your way driving to Staples, getting their ink cartridge, putting it in a package, sending it out to them. Writing a maybe a handwritten note on their receipt. You still do that?
John: Yeah, we try, you’re telling about the benevolent dictator signature at the bottom, yeah (?).
Andrew: So you go through all that, the customer’s happy, how do you bring them back and remind them, hey you didn’t just get that from Canon, you got that from John of StinkyInk and you should remember if you ever need more ink to come back to my website. How do you get that repeat business from a customer?
John: Well we’ve always had a really good repeat business, 50% of our business is recurring business.
Andrew: So how do you do it? Because there are people in my audience who are selling products who want to know how do they increase the number of times that a customer who’s happy buys from them. What’s some advice that you have?
John: You’ve got to give them brilliant customer service. You’ve, I keep saying it, we must treat our customers exactly the way that we want to be treated when we trade online. And everybody within my organization subscribes to that and works really hard at that. We e-mail special offers, we have auto responder setups after three months they get a reminder your ink might be running low, it may be time. After six months if they still haven’t bought we’ll send them a 5 pound voucher they can spend online. So we really work with the e-mail list, you know. And as I say we’ve got a good 50% return rate. So there’s two good numbers, one is we’ve got a good solid customer base but the other is that we’re getting 50% new customers from Google, so, yeah.
Andrew: What are some of the things that you do like, did I get this right? You did used to send people a handwritten thank you note when they bought?
John: Yeah, yeah, well you know a copy, a printout of one, yes.
Andrew: On the printout you would write, with your hand you would say thank you?
John: Thanks for your order and please come back. We send a pen, we send a StinkyInk pen with every order we send out, so people got us on their desk. We often send out, Christmastime we’ll put a chocolate or something in the bag or you know, we try and keep a small business mind rather than a corporate mind. So if there’s something, at Eastertime we’ll put creme eggs in the (?). They sometimes get smashed. There might be a bit of mess but it’s all about projecting an image of fun. I’m StinkyInk.com, you can’t take me too seriously can you? So that goes right to the business. We take our business very seriously but we try to project a friendly, happy atmosphere to our customers, yes?
Andrew: Why is it called StinkyInk by the way?
John: Will you ever forget me? Next time you need ink where you going to go?
Andrew: I see, it’s so memorable, right.
John: That’s right. I mean, that’s going back in time when I say when, back in 2000, 2001, all these dot com companies. How do you differentiate yourself? How do you become memorable. So it’s also you need something that has relativity in the now, doesn’t it?
Andrew: Yes. Stinky Ink. I don’t think people will forget it. You service the U.S. and around the world or is it just Britain?
John: No, it’s just UK and Europe.
Andrew: UK and Europe.
John: You folks who go to Google, don’t go to UK. So we do a small amount of trade into Europe, but it tends to be Brits living abroad still using .co.uk. In Europe it’s difficult because of all the different languages. To take the run into Europe would be almost meaningless.
Andrew: Right. Tough. So here’s what I was going to say. Instead of actually promoting Mixergy Premium, my product, I’m going to say thank you to somebody who signed up and congratulate him on the launch of his new business. This is a Mixergy Premium member named Perague (sp) who launched his new shirt company called huckleberry.com. Actually, that’s the url, huckleberry.com. I asked him, ‘What did you learn from Mixergy that you used to launched the business?’ I’m looking here at his email. His email is way too long for me to read over here, but here’s one thing that stood out for me: not what he learned, but how he learned. He says that he makes his own cheat sheet when he listens to my videos. So he’ll have a pen and paper, maybe he’ll type it up on his computer, and just have notes. What did he learn from each program that he watches and how could he use it in his business? And he says to himself, ‘The main reason I write it to myself is so that I can remember and execute it right away.’ That’s a really good lesson for everybody. If you want to check out his site, check out huckleberry.com, and if you’re curious about what Mixergy Premium is, Mixergy Premium is real entrepreneurs, dozens of them, who come on to teach one thing that they do exceptionally well and show you how you can do it too. If it’s to manage a diverse team, they teach you how to do that. If it’s how do they find out from their customers where their customers’ frustrations are, I ask them to come and teach that and then how to teach how to solve those frustrations. It’s basically business-building tools and lessons direct from entrepreneurs. If you go to mixergypremium.com, you can do what Perague did, which is join and learn directly from those proven entrepreneurs. Mixergypremium.com.
By the way, coming back to this interview, I said at the top of this interview that the revenues were over 3 million British pounds. This is a business where there’s a lot of product to move, and I imagine that the margins are pretty small, right?
John: I don’t know if I want to tell you this. I’m fairly open about these things. The net margin is tight. We ship between 8,000 and 10,000 packets a month, so it’s about volume for me.
Andrew: Do you end up with, at the end of the year, over a quarter million pounds in profit?
John: Yeah.
Andrew: OK. Over half a million pounds?
John: No, not quite.
Andrew: OK.
John: My accounts are filed in (?). You can have a look at it. I think the last two years we’ve made about 200,000 pounds.
Andrew: 200,000 pounds. And you talk about this publicly beyond Mixergy, or is this the first time you’ve talked about it publicly?
John: I file my accounts publicly, so they’re accessible to anybody over here to have a look. It’s not an issue.
Andrew: What do you mean you file it publicly? I’ve never heard of this.
John: Well, in the UK corporations have to file their accounts at Companies House. Small business up to I think 6 million pounds can file abbreviated accounts. I choose to file full accounts because then my suppliers can see that we are increasing our sales and we’ve got a strong balance sheet and all the good things. I have many suppliers, probably 5 or 6 suppliers, with 100,000-pound credit limits. That’s important for me. And, hey, if somebody wants to come along and buy the business, then the information is there as well.
Andrew: That’s impressive.
John: You may choose not to put that in the interview.
Andrew: No, I have to leave everything in. We can’t edit anything out.
John: You should have warned me. Yeah, right.
Andrew: No, seriously, are you OK with this?
John: Yeah, yeah.
Andrew: Good. I can’t edit it. I get requests sometimes. People say, ‘Whoa. I can’t believe I just revealed all of that. Please edit it.’ And I say, ‘Don’t make me say no, because now we’re going to lose our friendship because I can’t edit.’ All right. Let me end with this. What’s one thing that you can leave my audience with, one piece of advice? I know by the end of this interview people are looking at your success and going, ‘Boy, if this guy who had big setbacks in his past can build up his business so admirably and have fun along the way and leave the kind of impression on his audience that I saw Twitter that you leave on your audience, we want this.’ Give us some advice for how we can get to this stage, too.
John: You’ve got to be really, really committed. You’ve got to be so focused and committed to what you’re doing and have absolute belief in your own ability to do it. I’m really passionate about our business and about small business and as I said to you earlier this thing about 2 to 3 years and businesses closing down, got to get through that, and got to be focused.
The biggest thing to get any business through that difficult time is cash flow and just managing cash flow and maybe you’re not an entrepreneur, you’re a business man. The entrepreneur gets the business going. The entrepreneur drives the business in different directions as you go along but you’re still going to have the businessmen’s hat to wear to manage your systems and manage your people and manage your cash flow.
A really interesting post, I’m sorry but I can’t remember who wrote it but he said ‘A good CEO should do three things. He should employ the best people he can, he should have a strategic vision for the company which he should communicate to his entire team, and he should have enough cash in the bank to pay the bills.’ And if you’ve got those three things, you’ll be successful.
Andrew: When you say manage cash flow, what do you mean by that? You mean put a spreadsheet out that shows how much cash is coming in and going out over the next few months so that you won’t be caught off-guard with no cash in the bank?
John: Absolutely. That’s absolutely fundamental, specially in a business like mine around buying products [??] cash we’re getting in but also the fact that you got cash in the bank to pay the bills when they’re due. That’s just critical.
And again, going back to the early days when it was [??]. Again in a small business situation, it’s easy to loose a thousand pounds a month and to make a thousand pounds a month. And you’ve got to be so focused onto your cash at the end of each month and understand where you’re making money and where you’re loosing money and whether the [??] pitfalls are.
The issue for many businesses is that they can have a great sales book but they don’t have the cash to pay for the stuff coming in to sell the product . So it’s about understanding your [??] bounds, it’s understanding your cash flow and accumulating cash.
A real interesting [??] recently, I think it was on the New York Times. It was about companies that grow to $5 or $10 billion and the big thing about the obvious ones Microsoft, Google, Facebook, these companies tend to be software companies so they are universal. But they also got time on the side. So that 10, 15, 20, 25 years old, that’s the beauty of going through that 3 year period, getting into 5 year, 7 years of trading, accumulating wealth in the business on your balance sheet. So people looking into your business and saying that’s a strong business, in those early days it’s so difficult to build that balance sheet, to get that cash and you got to be so aware of it. And for an entrepreneur who has no experience, that is probably the most difficult thing. It’s understanding how to manage his cash. Not chasing out sales orders, which you can’t possibly fulfill because you can’t afford to pay the bills to get the product in to sell to the customer.
That’s what brings a lot of businesses down, it’s the cash flowing behind.
Andrew: Well, thank you. This is really great advice. This has been an incredible interview and let me ask the audience this before I even give the name.
Can you guys remember John’s company’s name? [??] both, me and people in the audience. Me and the persons listening to us have walked away from an interview and go ‘what was that company’s name again?’
So in this case you guys remember that it’s StinkyInk. StinkyInk.com and it’s actually StinkyInkshop.co.uk?
John: Yes. [??]
Andrew: That will take them to it, too. All right, yes, I see that. Good. I was afraid I gave out the wrong domain.
And if someone wants to say thank you for doing the interview, what’s a good way to connect with you?
John: I’m on Twitter. I’m SmileyJohn54.
Andrew: SmileyJohn54.
John: Yes, because I smile a lot.
Andrew: I’ve noticed.
John: [??] story. Either way, I’ll get this.
Andrew: Well, thank you for doing this interview and thank you all for being a part of it, too. Bye guys.
John: It’s been a pleasure, Andrew, and a pleasure to meet you.
Andrew: Thanks. Same here.
