Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart.
I’m smiling because apparently I’ve got a reputation with interviewees for being a real hard-ass. So, why don’t we go a little bit light? Andrea, before I fully give you the introduction, can you show everyone the view that you just showed me as you were adjusting your computer? I think you are in Heaven.
Andrea: It’s possible that I am. I’ve been part-time in Sedona for 15 years, Sedona, Arizona.
Andrew: Look at that.
Andrea: It’s good stuff. Not so bad. That’s my office view today.
Andrew: Is it inappropriate for me to ask you if you own that place?
Andrea: That would be so inappropriate. Why would you ask me that?
Andrew: I’ll tell you why.
Andrea: No. I don’t. I took a bath in a really lovely home that I owned in Santa Fe, New Mexico and ever since then, I prefer to rent because I don’t like to carry the debt of a mortgage of some place that I’m not sure that I’ll be at forever.
Andrew: What does a place like that rent for in Sedona?
Andrea: It’s free! It’s free.
Andrew: Is that right?
Andrea: It’s $1,700 a month.
Andrew: No way.
Andrea: My hand to god. And they just raised my rent.
Andrew: Ah.
Andrea: They wrote me this huge long thing about how like it’s time because I’ve been here for years and they raised it $100 a month to $1,700.
Andrew: I am paying $5,000 rent for a two-bedroom place with a really nice backyard in San Francisco–$5,000. All right. Here. Andrea Lake, she is the founder of many companies including Sticker Mule and Lessons.biz–
Andrea: Oh…
Andrew: Excuse me, Sticker Mule, oh my goodness. That’s the competitor.
Andrea: What?
Andrew: StickerJunkie. Oh my god. I can’t believe I did–actually, I screwed up. I’m going to roll with it anyway. StickerJunkie, Lessons.biz, a site that teaches other people to create profitable apparel businesses. Let me just be clear about that. That’s Lessons.biz is the site that teaches people how to create profitable apparel businesses. It’s hard for me to go from that kind of screw up to this.
But here’s why I asked if you owned the place and why I asked to look around. I’m trying to get a sense of what you’ve done and I’ve been Googling you like crazy. I know that you were on “The Apprentice.” I know that you’ve got a large following. I know that a past interviewee of mine is a partner of yours, Dan Caldwell, from TapouT.
I’m looking at StickerJunkie. I can’t tell. Is it a big profitable company? Is it not? I’m looking at DelinquentDistribution.com. That’s one of your businesses. The site is down. So, that’s what it is. What’s the big win?
Andrea: So, Delinquent Distribution, I owned the exclusive sales rights for years and years on Minecraft, World of Warcraft, Walking Dead, The Hobbit, any big gaming or geek property that you can think of, their merchandise to chain stores. So, it doesn’t need a website because it’s a direct relationship with buyers. I don’t even know how you found the link to it. It might be on the old AndreaLake.com site or something.
Andrew: That’s the other thing. The old AndreaLake.com still has like flash or something and I couldn’t check that out.
Andrea: I know. I don’t know. I’m a little hard to pin down.
Andrew: Believe me. I’m not being judgmental. I’m the guy that just screwed up an intro. Like the beginning part that’s written on my screen, I screwed up and screwed up rapport right at the beginning of the interview. So, I’m not being judgmental. I’m just trying to figure it out. So, what’s the big win for you? Is it StickerJunkie?
Andrea: StickerJunkie does great.
Andrew: That is?
Andrea: Yes. It does. I had a different sticker company prior to that and then in 2001 we launched StickerJunkie and we have great customer service, super loyal following. Like, every single website is being redesigned right now because for years and years I owned the exclusive sales rights to Minecraft to chain stores. So, if they wanted to buy Minecraft, I was the only person they were allowed to buy the merchandise through. That didn’t suck.
So, on January 1st of this year, they took their sales in house. So, all of a sudden I’m fixing all of my really badly designed websites. So, within the next couple months, there will be a new AndreaLake.com and then StickerJunkie is getting a total facelift. We have like the quality stickers you can have.
Seeing as how we’ve been around since 2001, we have all kinds of different machinery, far more advanced machinery than most sticker shops. Most sticker shops nowadays just get the new digital presses, which are great, they’re fine and then they don’t know some of our secrets that we learned over 15 years.
Andrew: How much revenue could a custom sticker site like StickerJunkie generate? What did you guys generate 2014?
Andrea: We don’t share our numbers that way.
Andrew: Are we talking about…?
Andrea: 20 million stickers.
Andrew: 20 million stickers–I don’t have a sense of how much that is. Are we talking about more than $500,000 in sales?
Andrea: Oh yeah.
Andrew: More than $1 million in annual sales?
Andrea: Yeah.
Andrew: More than $1 million in annual sales from stickers?
Andrea: This is the house that stickers built, even though I rent this one. I do have a couple of houses. But yeah, every business, every band, everything needs stickers. Everybody has a logo. You need your logo as stickers.
Actually, what’s more effective for people–this is a sticker trick, you guys–don’t just get your logo sticker. Get something that’s super clever, like a bumper sticker that’s super clever and then put a tagline with your website on it because people are far more likely to like put up a sticker that says, “I heart tattooed girls,” than they are the logo of a particular tattoo shop.
Andrew: That makes sense. I can’t believe–honestly, hand to god, over $1 million in sales from StickerJunkie?
Andrea: Every single sticker site that is doing well, all of them do well over $1 million. Yeah.
Andrew: I had no idea. And then what kind of margins are there on this thing?
Andrea: They don’t suck.
Andrew: They don’t suck. So, we’re talking more than 50 percent margins?
Andrea: So, as soon as you cover your base costs, which will probably be about $750,000 is break even with all the BS and the machinery and everything that goes along with running a business. And then everything over that is incredibly high profits.
Andrew: And then once you own your equipment, that’s it?
Andrea: Well, I usually [inaudible 00:06:28] and stuff like that. So, I own my equipment outright. I always just buy in cash. I don’t buy new stuff until I can buy it in cash because I lost everything a long time ago. So, I’m sensitive about that.
Andrew: We’re going to get into that. You got close to bankruptcy. This is after the sticker business took off, right?
Andrea: Yeah. I had another company called Zoko Inc. that did subscription-based websites for bestselling spiritual authors. So, we did like Gary Zukav and Don Miguel Ruiz and a bunch of the Oprah authors. We actually were on Oprah with that company and she personally endorsed the product. But it was really early. It was 2005. The technology hadn’t caught up with it. So, I took a total bath. It was self-financed because I’ve always been a bootstrapper. So, it was a horrific, terrible nightmare.
Andrew: All right. I’ve got to get into how you got this far, how you built up the business. I should say real quick that this interview is sponsored by DesignCrowd. If you need a designer, don’t get a designer. Go to DesignCrowd instead of a designer. If you do, you’re going to get lots of people who are going to design your work for you and you pick only the best. I’ll tell you more about them later.
And if you need a developer, I want you to go to Toptal.com. Later on I’ll tell you why they’ve got the best developers who can work part-time, full-time or just a few hours.
But let’s go back to how you started this business.
Andrea: Okay, which one?
Andrew: You started out, our team asked you what were you doing just before and you said you still owned Delinquent Distribution. What was the very first business that you built, even before you built Delinquent Distribution? I want to know where the start was.
Andrea: It was Rhythm Styx. You know those sticks where you hold one in each hand you use the two that you’re holding to throw around a center one?
Andrew: Uh-huh.
Andrea: I’m super into design, not that you can tell from some of my poorly designed website. But I made the product better than they ever had been made before. I still have an Etsy store, RhythmStyx on Etsy. It’s for people who are like addicted–I think it’s on vacation mode right now. But people who are addicted to them, they want the nicest ones. I just was addicted to playing with them. I didn’t even think of myself as an entrepreneur. I think it was the first year in sales, I did like almost $100,000 in sales and I was 18.
Andrew: Where did you sell $100,000 worth of these sticks?
Andrea: So, I just was a little hustler. I didn’t end up going to college. So, I had to figure something out. So, I sold at street fairs. I sold in mom and pop shops. I sold at kite stores. I
Andrew: You would just walk in and say, “Here are these rhythm sticks that I created. They’re beautiful. Really?
Andrea: Yeah. Just walk in. My friend sewed me this super cool bag and I would walk in with like a bag with the tops of them sticking out and they’re super beautifully designed so they looked really pretty. So, almost every single store I ever walked into bought from me. It was very positively reinforcing. And then I would sell them for like anywhere from $12.50 to $15 wholesale depending on quantity and then I would sell them from $20 to $25 if I retailed them at a street fair. So, I was like a baller for an 18-year old.
Andrew: Here’s a question that I think a lot of people hate. So, guys, just hit the 30 second fast forward or just hit a few times if you don’t like this question. Here it is. I’m trying to understand what your motivation is at 18 to go out door to door and sell these sticks, rhythm sticks to head shops. Why do that? It feels to me like you have it together.
For me, when I got into business it was largely because I felt like a loser. There was nothing going on in my life. If I could make enough money, then I could have anything I wanted and undo this sense of inferiority that the world gave me because I didn’t full fit in. That’s the hole in my life that business was filling. What was yours? Why would you at 18 go out and do that instead of partying or going to school?
Andrea: First of all, same answer that you just gave.
Andrew: You were a loser?
Andrea: I felt like terrified. I didn’t even understand how I was going to be able to afford my life, not like the life that I live now where I get to travel all the time and have really nice houses, but just the bare minimum. I didn’t know how I was going to pay my rent. I honestly just was smoking so much pot that I couldn’t go to college. I was just like, “I just can’t deal with it.” But I would have gone but I would have been a women’s studies major at UC Santa Cruz. “Would you like fries with that?” What’s that going to get me in life?
Andrew: Nothing. So, you started to be so afraid of having to maintain your own life and pay the bills so you hustled so that you can do it.
Andrea: Yeah. Also, I wanted, like you said, a great life. I wanted to be able to do whatever I wanted to do. So, my dad actually always encouraged me. He always was like, “The only way you’re going to be able to control your life and control your time and control the amount of money you make is if you work for yourself.” Even if you’re like the CEO of Coca Cola, you have a board that you’re answering to that can fire you and they limit how much money you make even if it’s really a lot. It’s still limited.
Andrew: What did your dad do?
Andrea: He passed away when he was 51. He was career Navy. He was a submarine man. He was the chief of the boat. When he finished that, he convinced my mom, who is a computer scientist–she was the only woman in her graduating class in ’79 in computer science–to leave Northrop Grumman and come start a Century 21 real estate agent team with him. They were the number three agents for Century 21 in all of California.
Andrew: And I imagine that he must have had a lot of motivational books around the house. He must have listened to Tony Robbins CDs, that kind of thing? That’s what he was listening to as you were growing up. Did you absorb it?
Andrea: Yes. I have two of those moments. He of course gave me “Awaken the Giant Within” when I was 14. But when I was 11 or 12, I was super young, he gave me “The Art of the Deal,” and he goes, “This is what it means to be successful in America.” If you are not making a lot of money by my dad’s standards, then you were just failing in life. He didn’t really think that. He had friends of all different lines, but for me that was sort of his prerogative.
Andrew: That’s the environment I grew up in. I grew up in New York where Donald Trump was starting to make it and he was a legend over there already. You do see people, not just Donald Trump, but lots of people who are making it big and you think, “Well, everything else is insignificant.” I’m not just talking about in business, but it’s largely in business. Even in arts–what else is there other than business? I can’t think of anything else. You also at 12 had a cleaning business.
Andrea: I did.
Andrew: What was that like at 12 years old?
Andrea: You know what? I never even thought of it as a business. I just needed to make money because my parents stopped buying clothes for me when I was like 11 or 12. They were like, “You can figure it out. You can figure out how to make your own money.” This was back when like Esprit and Guess was really big and jeans were just starting to be like $70, which is like an insane amount of money.
So, there was this bachelor-y condo complex in Pacific Beach in San Diego where I grew up. We made these little fliers. We didn’t understand that people wouldn’t want just vacuuming or just dusting. So, we had line items or like the whole condo for $15. I think minimum wage was $2.85. So, it was like a crazy amount of money. All these guys didn’t care. They were all like finance guys and stuff. $15 was super cheap to them. They trusted these two little 12-year old girls to come clean their house.
Andrew: And you really would go in and you’d clean these people’s homes and that’s how you paid for your Esprit pants and your weed later on too?
Andrea: Well, I moved on before that.
Andrew: Okay.
Andrea: To Rhythm Styx. Am I in trouble? I live part-time in Colorado. So, I think it’s okay now.
Andrew: To say what, that you smoke weed? I think we’re totally fine with that. All right. So, then came–
Andrea: Anti-Establishment Clothing.
Andrew: All right. What’s that?
Andrea: So, I’ve started 14 companies since I was 18. So, when I was selling Rhythm Styx, there came a point–this is like before the internet. This was in ’92 that I started Rhythm Styx. So, I heard of somebody like two or three years into it that was making $10,000 a month profit selling t-shirts. I’m like, “That is all the money in the world. Are you kidding me right now?”
So, I started Anti-Establishment Clothing in ’98. It was super-offensive t-shirts. There was nothing online. I don’t have the domain name anymore. But it was a rad company. We sold like, “I Sell Crack for the CIA T-Shirts.” Some of them were really offensive.
All of these bands just organically started buying our clothes. We didn’t understand sponsoring them. But all of a sudden Live and Blink-182 and all kinds of other bands were really into our clothing line, my clothing line. So, Blink-182 started wearing it a lot. So, we just started giving them free stuff right when they were blowing up and that’s how I got into Hot Topic, into other big stores. And then I did what’s called a non-branded t-shirt line.
So, for years, I was the number one word t-shirt vendor for Hot Topic. I would have like 30-40 percent of their shelves in the whole store.
Andrew: Get out. What were some of the t-shirts in there?
Andrea: Well, the one that bought my nicest house was, “I Used to Have Super Human Powers but My Therapist Took Them Away.” We sold 125,000 of those.
Andrew: Somehow I get that. There’s something about that that really feels right.
Andrea: It does.
Andrew: What are the offensive t-shirts?
Andrea: Well, some of them were really offensive, just embarrassingly offensive ones, but some of them are more clever.
Andrew: No. Go for the embarrassing ones. ITunes doesn’t respect me anyway. So, it’s not like I have to even mark this as explicit or anything. I don’t expect their explicit requirement where I have to mark this as explicit. They don’t respect me. So, we might as well just go for it. What do they say?
Andrea: “Nothing Says I Love You Like a Blowjob.”
Andrew: Gotcha.
Andrea: “Real Men Like Pussy.” Some of them are so bad, like, “Fuck Your Religion.” It was just terrible. But people bought it. “My Parents Are Assholes.” I remember when I showed my catalogue to my mom, the first one, she’s like, “Andrea!” I’m like, “Not my parents, people that buy this t-shirt.” And then my favorite was, “I’m Bad with Names. Can I Just Call Your Dumbass?” And they all came out of my pretty little head, almost all of them.
Andrew: I think I’d be proud if my kid did t-shirts like that.
Andrea: They were really proud once they saw. Actually, my father had already passed away before I started Anti-Establishment. But my mom was super-proud. Especially when she saw how much they were selling, she’s like, “Whoa, this is working.”
My first year with that company, I think we did like $400,000 and the second year we did well over $1 million and then we started advertising. Back then, you used to advertise on magazines to get people to go to your website. So, the back cover of High Times, we advertised in Rolling Stone, Maxim Blender, Stuff, all these big–that is why all the bands, I’m sure, started buying our stuff.
Andrew: Because they were reading those magazines. By the way, do you ever find yourself looking at something that you’ve done that you’re especially proud of and wishing your dad could see it?
Andrea: Yeah.
Andrew: Like what?
Andrea: Actually, he was such a big Donald Trump fan. I never even think about having been on “The Apprentice” because it was like ten years ago, but he would have been super proud. I remember the first time I got a check for a single sale. It was $2 million. He would have just lost it. He would have lost it. Or being on Oprah–any of it, having my company featured there, any of it, he would have been really proud.
Andrew: I could imagine.
Andrea: Yeah.
Andrew: Nobody cries with me. People are too defensive here. I’ve got to be more like Oprah and give people a comfortable spot. Even if I go back and ask you about your dad, there’s this sense that at any moment, I could attack with something else. So, how could you relax with someone like me?
Andrea: Right.
Andrew: So, I give up the crying but I get into the heart of the business. I’m willing to put up with that. That to me feels like a fair trade off. Let’s go into you starting to buy ads in magazines. That’s what really drove the business. How did you get into ad buying?
Andrea: It actually was effective at the time but it’s such an ineffective way. There was one year when we were looking at our numbers at the end of the year and we spent like $775,000 on magazine ads for StickerJunkie and Anti-Establishment. I just didn’t understand any other way to do it. So, I just was making it up as I went along.
Andrew: Were you the kind of person who would buy a few small ads first?
Andrea: No. The very first month that we launched, we got the back cover of Alternative Press. We got a big ad in Rolling Stone. We got a big back cover of somewhere else. I had already been advertising with Anti-Establishment. So, I already had pre-established relationships with these magazines. I would just negotiate and I just figured out about remnant space. I was paying way too much for those ads. It was $6,000 every month for the back cover of High Times magazine. But it was also really effective for us. People would go to the website but they also would just call and order because that’s what you did back then in like 2000.
Andrew: But you’d only have to move like 300 t-shirts to get the $6,000 back, right?
Andrea: To make $6,000, not in profit though. Well, if they were buying through the website, we were selling them for like $20. But then we were spending so much on ads. But most of our overhead only was ads and the cost of goods sold. Everything else, I ran that out of my house up until it was making millions of dollars. Actually, yeah, there was one year when we did like $6 million and I was running it out of this house in Sedona that I had back then.
Andrew: Why?
Andrea: I just didn’t know any better and I liked working out of my house. I don’t have much of a work/life separation. I just love business the way that some people love football. It doesn’t matter to me.
Andrew: So, why not then–I know when I started to make millions of dollars I said, “I need a big office because we’re going to make hundreds of millions of dollars one day.” I started putting the infrastructure in place. We never grew to hundreds of millions of dollars. But that’s what all the books I’d read said to prepare for and that’s what I was preparing for. You’re a person with huge ambitions and here you are doing $6 million a year you’re saying and still doing it out of your house. Why not put the infrastructure in place to go bigger?
Andrea: I did. When it hit that point, I did. I relocated to Santa Fe, New Mexico for four years and got a really big office space there. That’s when we really, really started hitting with Hot Topic. But the interesting thing with that was that business didn’t require any people. I just was selling stuff and I literally would design most of the shirts.
I don’t know of anybody else that did this before me. But I would run these contests on StickerJunkie where we would give people $500, which was a lot of money for us, if they would come up with a slogan for us and then they we would turn around and sell however many thousands of them. Sometimes we would cut them extra checks because I felt like, “Wow, we just made $50,000 off of your slogan.”
But when you’re selling to a chain store like that, it’s just my relationship with the buyer and then I soon as I get the order, I would order my blanks, have the blanks shipped directly to my screen printers, have the screen printers process them, print it up and ship it directly to the store. So, it didn’t require any physical space, even though we had really nice offices. Now we have offices in Venice Beach and in San Diego. Yeah. We don’t need that much space, really.
Andrew: If you did so well in apparel, why do you need Dan Caldwell for Lessons.biz? Believe me, I love Dan. I ended up spending a lot of time with him after the interview because I just liked the guy. But why do you need him on your site? Why can’t you be the only person that teaches people who to build t-shirt companies?
Andrea: Well, I could. With Lessons.biz, the entire premise is that you always have sort of a celebrity entrepreneur on board and Dan obviously knows equally as much as I do about building t-shirt lines. I have been a relatively private person. Nobody knows how I am and everybody knows who Dan is because he had a really successful TV show. Dan and I also own MentorMojo.com, another company together. We’ve just been friends for years. You remember the Learning Annex?
Andrew: Yes.
Andrea: I had the bestselling class in the history of the Learning Annex. I outsold Jack Canfield.
Andrew: What was the class?
Andrea: How to start a t-shirt company.
Andrew: Really?
Andrea: I used to always bring in a guest lecturer. Dan used to come guest lecture when I would to the ones in LA. I think he might have done one with me in San Francisco. I don’t remember. He just is a great guy. He knows a crap-ton. He thinks really differently than most apparel entrepreneurs I know. He thinks really outside of the box. He’s a genius.
Andrew: Give me an example. What’s one thing that he’s come up with that blew your mind?
Andrea: Well, when Ultimate Fighter started, he was staying at Chuck Liddell’s house because they’re good friends. They didn’t have any money back then. He would be like, “It’s cool, Chuck. I’ll do your laundry.” But he would only wash the TapouT clothes.
Andrew: And TapouT was his company, his apparel company.
Andrea: And he found out where the house was where all the fighters were and where the gym was where all the fighters were. He drove back down from Vegas to LA, got tons of boxes of clothes and then threw them in the gym and then all of the fighters like got there and tore it up. They were head to toe in TapouT for free on a show that ended up getting millions and millions and millions of viewers. But he does stuff like that daily in his companies, just very outside of the box thinking to make it big.
Andrew: I get that. That is something impressive about him. And he’s got enough charisma to pull that off. He could just wash his branded clothes for you and you’d love him for doing it.
Andrea: Yeah. He said Chuck never even noticed.
Andrew: That makes sense too.
Andrea: He would just go with what was in the drawer. So, he’d grab a TapouT shirt and that was it.
Andrew: So, the sticker business is doing well. You then go and start a bunch of other businesses. Why do you start multiple businesses instead of just focusing on the one that’s doing well?
Andrea: I get that question a lot. I get a lot of criticism from some of my good entrepreneur friends about that. But I have a personality type where first of all, like all entrepreneurs I have a million ideas. But secondly, if I’m just focused singularly on one of my businesses, I will choke it to death. I will worry about this little tiny thing. When I find that personally, if I just focusing on whatever feels the best of the next thing I’m creating, then I just stay in a better, clearer headspace.
Andrew: I see. Then how do you figure out which of the business ideas you have will make sense to start?
Andrea: So, I do minimum viable products.
Andrew: Can you give an example of one of your minimum viable products that grew up to be a big product?
Andrea: All of them. But StickerJunkie and Anti-Establishment, Delinquent Distribution, they all started as almost nothing. We didn’t call it MVPs back then because it was just necessity. I was a bootstrapper and I didn’t have any money.
Andrew: What’s the MVP of a sticker company?
Andrea: So, that one we did not own our own presses yet. So, I just negotiated a deal with a big screen printing house. They were selling these stickers for like $0.12 and I was selling them for $0.25. And everybody still was making margin.
Andrew: I would never have known that there’s that much money in the freaking sticker business.
Andrea: There’s not. Don’t start a sticker company. It’s terrible.
Andrew: Did you end up with a lot of competition?
Andrea: I did.
Andrew: You did?
Andrea: I didn’t have competition for a long time. So, it was no fun. I hate all of them. I think they should die. I’m actually really good friends with John Fisher from Sticker Giant. Everyone needs stickers, literally. I always call t-shirts a bottomless market because you probably have 50 t-shirts and if you see another one you like, you’re going to buy it. Stickers are the same way. Every single company needs to be promoting with stickers. They buy them and they give them away for free and they buy more.
Andrew: I see. I guess in a way that people used to do with business cards.
Andrea: Yes. Actually, we did a whole campaign for years getting tattoo shops to switch over from giving people business cards to giving them stickers because when you’re done getting a tattoo , you give ten business cards to your clients to give to their friends, which sometimes they do and mostly they just go in the trash.
But if you give them ten stickers that say like, “I Heart Tattooed Girls,” or whatever, “Tattoos Get You Laid,” and you have your shop name at the corner, somebody is putting that on their car or on their fridge or on their guitar case, and then when they’re ready to get a tattoo six months later, they’ve been looking at your shop’s sticker the whole time. They go to you. It’s very smart.
Andrew: I would love that. I would love to have stickers and t-shirts for Mixergy. People have asked with them for years. I can’t come up with the stuff. I can’t come up with, “If You Love Me, You Whatever… Give You a Blowjob.” I need like the right phrase.
Andrea: I got you.
Andrew: I don’t have your creativity for that.
Andrea: I’m good at that game. We’ll get you something good.
Andrew: It just comes up to you?
Andrea: Slogans? I’m pretty good at slogan writing. In general, that’s how I’ve made most of my money. You asked my big win. Of course it was when I got the sales rights on Minecraft. That was all working. But prior to that it was selling slogan t-shirts to chain stores. I had, like I said, 40 percent of Hot Topic shelf space and then I had 40 percent of Mr. Rags, which nobody even remembers that store. And then I licensed all of these.
Everybody thought it was really hard to sell to chain stores, all my competition. I got the licensing rights on all these clothing brands that were smaller at the time, like Seedless Clothing and J!NX and a bunch of other lines that got quite big. And then I retained their licensing rights and then when they got too big for me to have their licensing rights, I switched over to owning their sales rights.
Andrew: To owning their sales rights? What does that mean?
Andrea: That means I would handle their sales. So, all that Delinquent Distribution had to do for those ones, not for the original shirts was just make the sale, deal with the buyers, invoices, make sure everything got paid and got delivered on top.
We didn’t have to manufacture any product. They actually would manufacture the product themselves. Then you have an additional buffer in the negotiation. So, it was rad because when you own a business, you’re still like, “I have to make a sale,” and the buyer like, “We’re not going to buy it from you unless you drop your price $0.50.” And I would just be like, “No.”
But if they were talking directly to the company themselves, the company would have probably dropped their pricing, but I just wouldn’t because I had so many lines I was representing, so as a result it worked out really well for everybody. And the chain stores still made really good profit. They weren’t paying me crazy but they were paying me probably $0.70 or $0.80 a shirt more than they would have been paying the company itself.
Andrew: All right. Speaking of design, I should say that sponsor is DesignCrowd. If you need something designed, maybe you need a new landing page, maybe your logo stinks, maybe you’ve got a great sticker company that the website doesn’t look like it’s doing as much as it is. You don’t want to find one designer who could give you good results or bad results or if you ask for a little change, you’re hurting the person’s feelings and then it becomes this whole back and forth. You don’t want that.
What you want is to say what you need and then have multiple designers create something for you. In fact, DesignCrowd has thousands of designers that they work with. Many of them will create designs based on your specifications. You can talk to them. You can give feedback if you need and no one’s feelings are going to be hurt. If they do have hurt feelings, who cares? There are tons of other designers on DesignCrowd.com. Here’s the thing–you pick the one you like. You pay for it and you’re good to go and that’s the design you end up running with.
The cool thing, though–I know you’ve seen this kind of crowd-based design solution in the past or from other companies too. Here’s what’s amazing about DesignCrowd. They don’t just pay the winner. They also pay some of the other people too who have created designs for you. The problem with the other design sites is there’s only one person who gets paid, everyone else gets nothing.
So, when they start out creating designs, they start out thinking, “Why should I put everything into it? I’m probably not going to get paid. One person is. Maybe it will be. Maybe not. I’ll just put a little bit of effort into it and who knows. It will be like winning the lottery.” With DesignCrowd, even people who don’t win, even people who you don’t like get paid because they put in the effort to please you, to give you a design that you want.
All right. So, if you want to go to DesignCrowd, what do you do? Do you go to DesignCrowd.com? No. That would be a mistake. You want to go to DesignCrowd.com/Mixergy. Why? Yeah. It gives me some credit. But I’m alright with not getting credit.
Here’s the best part. If you do that, you’re going to get 90 percent of posting fees. That’s a huge discount. Even if you hate me, even if you don’t like the way that I’ve asked questions here today, you still want the 90 percent, right? So, go to DesignCrowd.com/Mixergy. It’s 100 percent guaranteed. You’ll love it. Go check them out and I’m grateful to them for sponsoring.
Everything is going well. How did you then end up in debt and near bankruptcy?
Andrea: Well, I’m going to give you the really condensed version because I don’t like to talk about the gory details. But the company was on Oprah. I self-financed it. This was back when technology cost like $100 gazillion to make. It was pretty advanced technology we were using.
Simultaneously as in that same week that that did not work out and the sales did not come, when we were on Oprah for a full hour and she let us use her picture on her sales page–I don’t know any other product except for the Starbucks chair latte that she’s ever done that for. I had put together a $2 million World of Warcraft deal and we got over $1 million worth of merchandise returned to us, $1.2 million, so everything just knocked me out. Then it was like a snowball effect.
Andrew: So, you had the right to create products with their logo on it.
Andrea: Yeah. And we sold a very large volume of t-shirts and for all sorts of reasons, they didn’t sell well in the store and they were sold on consignment and got returned.
Andrew: I see. Why didn’t they sell well in the stores? I can see you’re still in pain.
Andrea: It’s just the worst feeling to have that kind of a failure. And multiple other things happened. The IRS called me and told me that I owed like deep six figures.
Andrew: Why? Let’s be open. What happened there?
Andrea: Just accounting screw-ups. We were making lots and lots and lots of money and I was spending lots of money and I was developing new companies that were costing lots of money and I didn’t get the return of it.
The biggest screw-up that entrepreneurs can learn from is that I never ever liked to not look like I knew what I was doing. I was very defensive. I had brilliant, still have brilliant, amazing, multi-billion dollar mentors that are crazy and awesome and available to me. But I wouldn’t really ask them for that much help because I always wanted to look super competent, which is ridiculous.
So, I didn’t have a board of advisors. When I was launching this tech company, I was way overpaying for stuff. I didn’t fundraise. So, I didn’t like do anything properly. If I had somebody like Andreessen or someone behind me, they would have been like, “You’re testing stuff on T1 lines. What are you doing? There are tin can and wire dial-up connections in Kansas City. It’s not going to work for them.”
Andrew: I’m not fully following. Now we’re getting into tech company. Let’s go back just to the t-shirts. You had these t-shirts. You put them out on consignment. The stores couldn’t sell them. They’d kick them back to you.
Andrea: That’s not actually what caused it.
Andrew: Yeah, but if that’s just one aspect, I want to understand that part. Why didn’t the merchandise sell? I’ll get into the rest too.
Andrea: A lot of it didn’t make it to the sales room floor.
Andrew: Why not?
Andrea: Literally it was store by store. It’s such a long, boring explanation. I don’t know why a lot of it didn’t sell. We probably flooded the market with too much merchandise simultaneously. We were in a lot of different stores. I can’t even remember. That’s actually not the most effecting part of the story because my portion of that was only a couple hundred thousand. It was the tech company.
Andrew: Can we also talk about the IRS before we get to the tech company?
Andrea: Sure.
Andrew: That’s a big issue.
Andrea: Sure. When you start to make a certain amount of money, they give you your own agent.
Andrew: Do they really?
Andrea: Yeah. If you’re having–
Andrew: If you’re having issues.
Andrea: And they’re nice. They were very nice.
Andrew: What’s the issue? What happened?
Andrea: I had just hired a local–I don’t like to go into because they’re very fine people. But I hired a local company in Santa Fe to do my taxes. That was not fantastic. I way underpaid. Actually, I don’t know that I underpaid all that much because then they came back at me with another issue and it turned out I didn’t owe a bunch of money once I got a badass firm behind me, even though the IRS had said I did. They said I owed $40,000. Once my firm went through everything, they owed me $20,000. But this was a while ago. It was into six figures. I had to pay it.
Andrew: It was into six figures that you were short of the money that you needed to pay the IRS?
Andrea: Hire a totally badass CPA firm and like just pay attention and pay your quarterlies and do not owe a lot of money to the IRS. If you do, I know other people have had other experiences, but they were very nice with me. I found it to be like if you were wanting to pay them and you’re like just honestly screw up, they were really nice to me about it. They setup a payment program for me and stuff. They were nice.
Andrew: I was audited once. It took years. I think maybe three years of going through this audit. I never saw the IRS agent once. I did have badass accountants. They just handled it.
Andrea: Yeah.
Andrew: And at the end, we’re talking about millions in taxes and at the end it was something like $5,000 that some like maybe $20,000 that I shortchanged them but $15,000 that I should have gotten and then net $5,000 for all that. The accountants ended up making good money from it. Even them, I thought they would take tens of thousands for the years of work. It was hardly even that.
Andrea: Yeah.
Andrew: But it’s scary.
Andrea: When I owed them all of that money, I just sort of shut down. I didn’t hire a badass firm. I didn’t even know who a badass firm was. I hired another New Mexico firm that was like, “Yeah, just pay it,” which is not the right answer.
Andrew: It is harder to find a good badass firm. If you do what I did when I started in business–I went to Ernst & Young. I said, “These are one of the top guys. They always do the entrepreneur awards. I’ll go to them.” They don’t care about me. I’m too small for them. So, yes, they’re badass. They’re badass for the big guys. For me, they’re just like nursing me hoping one day I’ll be one of the big guys.
All right. So then there was that. What else? What were the other issues?
Andrea: So, then the issue was the recovery. The issue was then going and selling. I guess it was January, 2006 and then all of my chain stores just stopped buying the same quantity of merchandise that they were previously buying. They were buying millions and millions and millions of dollars of merchandise. It was just multiple at the same time things. Walmart started selling word t-shirts for like $5.
Andrew: That someone else had made.
Andrea: Yes. I’ve never sold to Walmart because they put people out of business because of their chargeback policies and markdown policies. So, I’ve actually never sold to them. But as a result, Hot Topic stopped selling word t-shirts and they started taking their word t-shirts in house.
So, I did still have the video game contracts, but also the recession hit the chain stores way, way, way previous to it hitting the general economy to where they stopped buying. So, had all of those numbers kept coming in the same way they were in the years before, I would have been able to recover from building the tech company and building that one sale.
Andrew: What’s the tech company? I didn’t see that on your LinkedIn profile.
Andrea: That’s the one where I subscription-based websites for bestselling spiritual authors.
Andrew: I see. That’s the one that Oprah even was willing to support.
Andrea: That’s right. She did.
Andrew: And you were building websites. You weren’t doing custom websites, right?
Andrea: Yeah.
Andrew: You were?
Andrea: Yes.
Andrew: Oh wow. That’s a lot of work.
Andrea: It is a lot of work and especially back then. I’m sure a lot of your listeners were building technology ten years ago. But it feels like it was 100 times more expensive. Now you can go to LeadPages, you throw up a site that’s like $97 a month. This was back in the day where it was six-figures to build out a custom back end technology. And I was overpaying for stuff, just the whole thing was a nightmare.
Andrew: Okay. And you were targeting spiritual authors and advisors. How were they to work with? Okay. Yeah. They don’t have a lot of money, do they?
Andrea: Well, even the ones that sold, like Gary Zukav and Don Miguel Ruiz are legit good guys and they sold hundreds–Gary sold 100 million copies of his book, “The Seat of the Soul.” Don Miguel Ruiz sold like 100 million copies of “The Four Agreements.” And they’re fantastic books. And they’re good, good people. They’re super good people. But they’re not business people. They would be the first people to say that. So, it was like I was speaking Chinese to them and they were speaking Russian back.
Andrew: I feel like LeadPages went after a really good market for that–people who are in business who are marketers, which means that they are aware of cots. They’re just good clients. If you build a good site for them, they’re going to make more money, which means they won’t mind paying you a few hundred bucks a month.
Andrea: I love LeadPages.
Andrew: Is that what Lessons.biz is built on?
Andrea: Uh-huh.
Andrew: At least the homepage. I want to do the second sponsorship message. This is one that when I did this message when Dan Caldwell was on doing an interview here, he actually took a note on this because it’s such a great company.
The company is called Toptal. Top as in the top of the heap, Tal as in talent, Toptal–these guys are phenomenal. They give you the top three percent developers as picked by their peers. You tell them what you’re looking for–what’s your project, how many people on your team, if any, how many hours you need the developer for–is it going to be a full-time position? Is it going to be part-time? Is it going to be someone who’s just going to work on one project and then move on?
They go out to their network, they find you the best fit, not just the best developer, but the best developer who fits within your organization. Often you can start within a matter of days with that developer and be up and running and get results with them. I know when we did it, we asked for a developer who worked in WordPress and was able to do a certain thing. It had to do with search. The developer that they gave us was good but he wasn’t fully clicking with us. We let Toptal know.
They introduced us to a second person who was fan-freaking-tastic, one of the best developers I ever saw. He coded everything up in about a week. It’s incredible. Now I think if we need to reach out to him, it’s not a guy who’s disappearing into the ether. I’ve got a contact at Toptal who can help me out and then we can continue, I believe, unless something happened to this guy, go back and work with the same developer.
It’s unbelievable experience at Toptal. It’s so personal to you that they actually said, “Andrew, would you mind if somebody wants an introduction, would you make the introduction?” I said, “Absolutely.” So, if you’re out there, if you need a developer and you want a personal introduction from me to Toptal, just email me, Andrew@Mixergy.com. I will introduce you to the right person at Toptal. You don’t even need it.
You can just go directly to Toptal.com/Mixergy. When you do, you’re going to see that they’re giving a special offer to Mixergy listeners because they know that you guys are the influencers who everyone else is going to for advice. If you have good experience with Toptal, you’re going to be recommending them to other people who are in tech who need developers.
So, if you go to Toptal.com/Mixergy, you’re going to see that you can get 80 free Toptal developer hours when you pay for 80. So, it’s an additional 80 free developer hours. Think about that. In addition to it, they have a no-risk trial period of up to two weeks. What developer does that?
Andrea: Awesome.
Andrew: They do 100 percent satisfaction guaranteed. Go to Toptal.com/Mixergy. They really are trying to win over the Mixergy audience and I can see it in this. Get it before–I don’t know how long this run of ads with them is going on, but get it before it’s done because who knows what they’ll do next. I can’t imagine they’re going to continue this. Toptal–I’m grateful to them for sponsoring.
How great would it have been if Toptal was around when you were developing your shop?
Andrea: Oh my god, I just bookmarked it.
Andrew: Right? I think a lot of people are doing that.
Andrea: Yeah. It’s incredible.
Andrew: How did you get into Minecraft? How did you even know to start with them?
Andrea: So, years and years ago when I was grabbing up the licensing rights of all of these different small companies, one of the small companies was a company called JINX.com. They ended up becoming the largest distributor of video game t-shirts in the world.
They asked me one day, “How are you getting all these licensing rights for all these people?” Because they knew how much how I was selling for them and they knew how much I was selling for Seedless and a couple of other clothing lines. They ended up going, then, to Blizzard Gaming and getting their licensing rights, which is StarCraft, Diablo and World of Warcraft. This was in 2005, I think, so right when it was really cracking.
They called me up and said, “We’re too big now for you to own our licensing rights and we’re going to have to let you go.” I said, “How about if I just retain your sales rights? I’ll still control the sales. I have the relationships with the buyers. They’re never going to negotiate down the pricing then.” They said, “Sure, we’ll give it a shot.” And then I did that with them for ten years.
Andrew: Let me take it back here. I want to see how this all works.
Andrea: Okay.
Andrew: I’m actually looking at World of Warcraft t-shirts right now. There’s one with a knife and the word Scourge on it. It’s kind of small. I see this red logo on a black t-shirt. So, that’s the kind of t-shirts they’re making. Sorry?
Andrea: That’s the logo probably for the Hoarde, if it’s a black t-shirt, and then there’s the Alliance. Those are the two factions within the World of Warcraft. So, you would buy the t-shirt that represents your faction. So, we had like Call of Duty rights, but nobody wants to be associated with a first person shooter game.
So, it’s best to have the rights on a role playing game like that where people are identifying with the character. That’s why Minecraft is so huge, because these kids are getting their whole identity off of the worlds they’re building in Minecraft. So, they want every single piece of merchandise they can get their hands on.
Andrew: Okay. So, I’m guessing what’s happening is you’re saying, “What else can I put on these t-shirts? I can’t keep coming up with slogans and there’s got to be more to it.” That’s how you reach out to brands that have more recognizable logos. Is that it?
Andrea: My exact line of thought was this. I have a ton of connections with chain stores that are awesome. I can sell them anything. So, if I’m in there selling them my lines, I might as well be in there selling them every single line that I can sell them.
Andrew: Okay. So, what’s the first line you took on?
Andrea: Unamerican Activities.
Andrew: What’s that?
Andrea: I don’t even know if it’s still around anymore. It was just a slogan-based t-shirt line. I got the rights on that in ’99 and I don’t think it did well after September 11th.
Andrew: I see. Okay.
Andrea: And then I immediately called every other competitor. I called Dub Industries and Seedless Clothing and [inaudible 00:46:52] and a lot of lines that are not around anymore. And then some of them did really well and some of them didn’t really sell.
Andrew: And you just said, “Look, I’ve got these relationships with stores, with retailers. If you give me your merchandise, I can offer it to them and I’ll make the introduction and I’ll keep selling it.”
Andrea: No. So, I said I’ll own your licensing rights. So, you can provide me with the artwork. You don’t have to touch the product. I’ll manufacture everything. I’ll get the sale. I’ll factor the sale myself. And you’ll just get a check for like 25 percent of the profit, which is like 12.5 percent of the sale.
It also was rad because I just looked like the Queen Mother. I’m just like handing out money to people. So, they really, really liked me. They were getting like a $40,000 check. In a lot of cases, they had never seen that much in a single sale.
Also, they looked at it in a different way because it was just straight profit. So, they kind of looked at it like, “Oh my god, this is all my money.” They understood that if they did $40,000 that month for their clothing line, they were only making like whatever, $7,000. But if I’m giving them a check for $40,000, it’s really $40,000. They didn’t have to do anything.
Andrew: Right. No expenses. No nothing. They’re just giving you their brand. How did you learn to do that?
Andrea: I literally just made it up. It was a moment of desperation. Finally, Blink-182 was wearing my stuff so much and my Hot Topic buyers kept seeing that, so, they tried Anti-Establishment clothing but it was too hardcore for their audience, it wasn’t selling, which was devastating. I had designed this whole clothing line, like my top goal was to get it in Hot Topic. That was my end game.
So, all of a sudden, I didn’t have an end game anymore. So, super professional, I did what any 23-year old girl would do. My buyer wouldn’t even call me. He kept buying stuff from me that wasn’t selling because I was being persuasive. So, he made his assistant buyer call me who couldn’t say yes to me. He didn’t have the power to say yes, which I knew.
So, I totally just started crying. I had worked really briefly as an escrow officer. That’s how I funded the t-shirt company at first. I started crying and I said, “I think I’m going to have to go back to escrow.” I swear to god, to this day, I think he thought that he said, “I think I’m going to go back and be an escort.”
Andrew: That’s what I thought you were saying when you first said it. I said, “This is pretty shocking. Okay.”
Andrea: He’s like, “Andrea, Andrea, oh my god. You crossed the biggest hurdle. We really like you. We’ll buy stuff from you, but you have to give us stuff that is selling. You have to. You can’t keep giving us stuff that isn’t selling.” So, I’m still crying, but I’m like trying to pretend like I’m not crying. It’s an ugly cry. There’s no hope. I go, “Okay. Well, I’ve been working on this new company called Delinquent Distribution and I’m going to get you 80 designs within two weeks,” which is crazy because DesignCrowd does not exist by then. There’s no source for this.
So, only your older viewers will know what this means. I don’t even put the receiver down. I just push down, click back up and immediately call the guy who owns my biggest competitor, Unamerican Activities and say, “I’ll give you 50 percent of the profits if you license your stuff with me.” He agreed.
Then I called all of my other competitors in the t-shirt liens, every single one I could think of. I made eight calls that day and I closed like six deals because I was so easy going. I’m like, “Hey, look, you just give me your licensing rights for three months and if don’t produce anything for you, we’ll call it off. But if I produce sales for you, we’ll keep going.”
I wrote this little contract myself that was like, “You have to give me written notice and you’ll be out of it in 90 days,” so, I would have at least six months total with the contact. I actually thought everyone was going to go around me as soon as I made the first sales for them and contact the chain stores themselves, but none of them did, not at once.
Andrew: Why do you think they didn’t?
Andrea: I think that it didn’t hurt that I was 23 and smoking hot and they were all guys. I don’t think it was a bad thing. Also, they legitimately thought it was really hard to sell to chain stores. They also understood the logic. I probably could get them a better price than they could get themselves. And I was like handing them checks. Why would they suck?
Andrew: Did you really cry? I remember interviewing Chris MacAskill about how he worked with Steve Jobs and Steve Jobs went into a meeting with, I think it was Toshiba, and they wouldn’t give him the deal he wanted and he started crying. And he got the deal. So, I don’t know. I can’t ask Steve Job if he faked it. Was it real for you?
Andrea: It was so real. I was terrified. I was terrified. I felt like my world was crashing down around me. I’m like, “I didn’t go to college. I do not have a fall back plan. This company is not working. This is the end goal.” Otherwise, I’m thinking I’m going to have a company that’s making $1 million or $2 million a year.
But any entrepreneur out there who has a CPG company or a physical product company knows that that’s like 15 percent profit, 20 percent profit maybe. So, it’s not like you’re rolling in dough if you don’t take it to the next level with a consumer product company. It’s different now that the internet exists because you can sell it at retail pricing, but just in general.
Andrew: All right. I see. You’ve worked so hard to build this business but then a bunch of things just smack you down and you get close to bankruptcy. Why didn’t you go bankrupt? Fast-forwarding again a few years into the future–why didn’t you go bankrupt and start fresh?
Andrea: Because I had borrowed from friends and family a lot of the money that I then owed. So, there’s just no way I would ever default on those loans. So, a majority of the money was to people that I would never default on. Plus, I know how to make money. I just kept reminding myself that. I’m like, I know how to do this. I have plenty of years that I’ve done $1 million in profit. This is not going to be the end of me. I actually have somebody that I was dating that offered to pay off all of my debt and I said no.
Andrew: How much debt were you?
Andrea: Over $1 million, just over $1 million. I also was putting money back into building the next thing out that would make all the money back.
Andrew: You were sating somebody who would have $1 million to just give you to pay off your debt?
Andrea: Yes. I was.
Andrew: Who are you dating now? Is that inappropriate for me to ask you?
Andrea: I’m single. I’m single and I’m looking and I only date serial entrepreneurs. So, if you’re listening and you’re a serial entrepreneur.
Andrew: I am married but I’m ready to divorce my wife so we could get married, you and me. You’re an earner. This is fantastic. Do you talk about this stuff in bed before going to sleep? Do you sit there and go, “I think I have an idea for how to get another t-shirt?”
Andrea: Well, yeah, I usually date guys who are entrepreneurs. So, we for sure talk about business. I always date entrepreneurs that are more successful than I am.
Andrew: Does that drive you crazy sometimes that you can’t get away from work?
Andrea: No.
Andrew: No? Sometimes I just don’t want to talk about anything.
Andrea: Well, I don’t talk about it–sometimes I do talk about 24 hours a day. I cofounded the tech entrepreneur hub house, the Winston House and at Kinney and Bennis. There are so many incubators and I’m like, “What about successful serial entrepreneurs that just want to all live together and then hyper-accelerate the growth of their new companies that way?” So, we built that and I was perfectly happy to be around six other entrepreneurs almost all of the time.
Andrew: Do you still have that?
Andrea: It still exists, but I gave up my room in there a few months ago and now I’m spending my time in Boulder.
Andrew: I bet Kinney is another beautiful place.
Andrea: It is. I still stay there when I go to LA.
Andrew: So, you believed enough in yourself to not take this guy’s money. Who was the guy?
Andrea: I can’t say.
Andrew: You can’t say? I might want to date him.
Andrea: I know.
Andrew: Imagine I get in trouble and I go to him, “Mixergy overextends”–Mixergy can’t overextend itself.
Andrea: We’re still good friends. I’m good friends with everyone I’ve ever dated.
Andrew: Who’s the most popular person you’ve ever dated?
Andrea: I don’t talk about them.
Andrew: I would. I talk about to my wife nonstop who I dated.
Andrea: I don’t like to bring up other relationships when I’m seeing someone.
Andrew: I don’t know why. I know why. I don’t like so much to talk about it. I like to hear about it. I want to hear about everything the woman has with has done, feels, the whole thing.
Andrea: Interesting. I want to not every imagine the guy I’m with having ever been with anyone else.
Andrew: I used to be like that. I used to be very jealous.
Andrea: I’m not jealous. It’s fine that he is. But I just don’t like talking about it.
Andrew: A serial entrepreneur that’s doing better than you–what’s the minimum they need to have? At least two companies, right? One company is for suckers.
Andrea: Who only ever has one company? I know a couple people but it’s very rare.
Andrew: I’m trying to think of big name person. Like Rupert Murdoch, that means he is out. But Rupert Murdoch, News Corp owns several companies and he’s single too.
Andrea: He’s a little bit out of my strike range, a little old for me.
Andrew: What else? Is there a minimum?
Andrea: No. It doesn’t work like that. They usually just are way more successful than I am. But also somebody’s who super passionate about their life. I travel a lot and so it just needs somebody that can keep up with traveling and all that stuff.
Andrew: Okay. Is it weird that I just asked you about dating all of a sudden?
Andrea: No. That’s okay.
Andrew: I try to let it go where it goes.
Andrea: It’s not weird if I get some super handsome serial entrepreneur that I don’t know that contacts me because of this. I’m blushing.
Andrew: Can you imagine? I wonder what’s going to happen, actually. That’s really interesting.
Andrea: You’re like a matchmaker. That’s your other occupation.
Andrew: Oh, how great would it be? I would introduce you to anybody who I’ve interviewed in the past.
Andrea: I’m going to have to go through your…
Andrew: Can you imagine if I did a matchmaking service just for interviewees. They have to have the qualifications to be interviewed and they get to–Mixergy babies, that would be my dream. Can you imagine that? And then you both get to go to bed listening to Mixergy interviews and you talk about business.
Andrea: I love it.
Andrew: I was listening to your interview with Morgen Newman.
Andrea: Right?
Andrew: The guy is super smart.
Andrea: I met him, actually.
Andrew: How?
Andrea: Summit at Sea, the first one.
Andrew: I might need to go to Summit at Sea. You’re going to the next one, right?
Andrea: I am. I love Summit.
Andrew: I remember when those guys used to call me up when it was just getting started. I was like, “That’s not going to work. I’ve got other things to do. I was wrong.”
Andrea: I know. Actually, I had this when I was a kid. I put together this Baller mastermind group. It was me and Dan Caldwell and J Allard, who invented the Xbox and Cameron Johnson and Tina Wells. Cameron went to the first Summit and he was like, “This is going to change the world.” We’re like, “What is it?” He’s like, “19 of us went to Aspen.” I’m like, “Okay.”
Andrew: Me and four of my friends went to Nobu. Nothing is changing. It’s not enough. Here’s what I don’t get. There’s so much I don’t get about you. You have charisma. You have this personality. You told our pre-interviewer that one of the things you could teach other entrepreneurs–we always ask other entrepreneurs we interview, “What would you be able to teach other entrepreneurs?” You said how to start a business community around you.
I guess maybe I looked online. You don’t have a following. You don’t have a big community of people. You should. I do. You have more charisma. Well, I have my own charisma. You do too. I would expect to see tons of people following you, tons of people talking about you.
Andrea: Hopefully after this interview they will, right?
Andrew: I think they would, but I don’t have a place to channel their energy. If I was curious about you two months from now and said, “What is she up to? What is Andrea Lake up to?” I Google you and I still find the old Inc. article from 2012, right?
Andrea: Terrible. What I mean about building a business community around me is that I am super integrated into communities like Summit and YPO and other business communities and I’ve cultivated my own community. I throw this event called Sedona Magic, where all of my best friends from Summit and other business communities come. So, I know a lot of the founders of most of the big companies that would be interviewed on a show like yours. And I have really tightly woven relationships with–
Andrew: I see. So, you don’t mean you have a bunch of Twitter followers and some kind of Facebook group of people who admire you. You mean real entrepreneurs who you meet in person.
Andrea: Yeah.
Andrew: What do you do to get those people in your world?
Andrea: My best technique that I did when I was starting out–I wasn’t doing it as a strategy. I was just doing it because I love being around people who are as passionate about their lives and have this really easy going, good feeling, high energy lives. SO, wherever I was traveling at, I would throw dinner parties.
So, at first when I was YPO prior to Summit, I would just reach out to the YPO community in that area. And then when once I got into Summit I would just reach out to the Summiters in Chicago when I was going there and host a potluck and in my house in Venice or when I go to San Francisco I get a big group of entrepreneurs. I encourage them to bring their favorite entrepreneurs and then I just create really great friendships.
I also almost always–I crated this thing called hijacking. I almost always only have conversations with one other person at a time because you lose a degree of intimacy for every additional person that’s in a conversation and then there’s just no bullshit. There’s no small talk. It’s really like what’s going on in your life. What are you all about? What are you most passionate about? What are you struggling with? The real deal.
Andrew: I see the value of that. I also wonder how someone who is earlier on in their career, who doesn’t have your reputation, who doesn’t have your network already could start a dinner like that and have it be full of high-level people like you have.
Andrea: Right. And they weren’t high-level in the beginning when I started to do that. It was like the shop owner that I was selling to that had four stores. That was like a way bigger entrepreneur than I was. Then it just kept scaling up as I kept growing and meeting higher and higher echelons of entrepreneurs.
It’s the same thing I advise people about mentoring. You don’t want Richard Branson to mentor you when you’re just starting out. You want somebody that’s doing like 10x what you’re doing. So, if you’re doing $100,000 in sales, you want a mentor that’s doing $1 million and then you keep scaling that.
Andrew: How do you make it worth their while? Why would someone who’s 10 times better or 10 times further ahead in business want to spend time with someone who’s a tenth of their size?
Andrea: Well, usually somebody that–I think most people want to share their knowledge. A lot of people don’t have an outlet to talk about all of the brilliant stuff that they’ve created. If their company is doing like $10 million a year, that’s not a massive company. They don’t have tons of people coming after them. So, they’re happy to share what they know, especially if it’s somebody who has a really sincere desire.
Actually, when I got my crazy amazing billionaire mentor guy, he had this list of 14 books. He’s like, “Go read these and come back to me in four weeks.” I did and he was super happy to talk to me because he never got to talk about the nitty-gritty about what he did. Everyone always asked him the same bullshit questions, like, “What’s your biggest failure? How did you do this?” To actually be able to sit down and say, “You need to do this and this and this in a really precise, detail-oriented way to make your company successful,” was something he super-enjoyed doing and still does to this day.
Andrew: I see. So, what did you do to turn around that set back?
Andrea: I just sold stuff. I just sold more stuff on StickerJunkie. It was a very hitting the grind and using the profits to pay off the debt.
Andrew: What do you mean? Do you have one specific thing that you remember that helped increase sales?
Andrea: Well, you know, we ran like a lot of specials and stuff on StickerJunkie just to increase people buying. And then I started doing more t-shirt stuff. It really was the same things that I already had in place. I also cut any business that wasn’t working. I cut my office size in half. I cut my overhead like way down form where it was. So, I saved money and sold more product.
Andrew: What year was this, roughly?
Andrea: Well, it built up to an apex. So, the debt was building probably from like 2006 to 2009.
Andrew: Okay.
Andrea: And then it was a slow start to pay it all off and then it took a few years to pay off.
Andrew: So, roughly around the time that YogaJunkie came out.
Andrea: Yeah. YogaJunkie we’re just starting on it. It’s been a small, slow mover. It’s been in federal litigation over the name for like four years.
Andrew: Really? Who’s suing you? A studio? Oh, some studio probably, right?
Andrea: No, no. It was my own fault. I had started this company and started producing merchandise and I never trademarked it. It’s a great lesson for your entrepreneurs. I didn’t even put an intent to use on it but I actually was in use. And then this person filed an intent to use trademark and I called her and was like, “Oh, we’re actually already in use. No you’re not. I don’t care. F-off.” In like three years of litigation, she never spoke to my attorney one single time. So, it’s just like throwing money after it and finally we won. But she didn’t have a right to it. But sometimes crazy people can hold out.
Andrew: And this is yoga apparel is what YogaJunkie.com does?
Andrea: It’s actually really similar–it will become similar when we build it fully out to TapouT. So, it will go around the sides of the industry. So, it will be stuff that you will wear that will identify you as a yogi without directly competing in active wear. And then there’s also a food lien that I’ve created that hasn’t come out yet. But it’s like $4 food items that you purchase on the way out of the yoga studio.
Andrew: When is this book coming out? I told you that one of the things that made me nervous about interviewing you is your website said there’s a book and I couldn’t find it on Amazon. You explained. What’s going on with that?
Andrea: So, you get the book when you order the class. It’s a $500 class. You get a book with it. The actual physical book should be on Amazon in a couple weeks. So, actually by the time that this interview airs. You should be able to buy the book on Amazon. It’s called “How to Build a T-Shirt Empire.” And then there’s a full class. There’s like a six-week class that you can take.
Andrew: That’s on Lessons.biz.
Andrea: It is.
Andrew: All right. And the book we can just buy standalone if we want to from Amazon.
Andrea: Yes. It will actually come as two books. It’s a book and a work book. It’s $47, but the book is worth $1 million if you’re starting a clothing line because it’s every trick to how to actually build a clothing line without losing your shirt. That’s kind of clever. I just came up with that. If you like the book and find a lot of value in it, which you will if you’re doing a clothing line because it’s every single thing Dan and I learned in 20 years in the apparel industry each. You get $47 off of the full class.
Andrew: So, your money back essentially if you sign up for the class. I already told Dan when I interviewed him how much I liked that video that you guys shot for Lessons.biz. It’s not just a well-produced video. It’s one that teaches. It’s not a sales video to me as it is the first three modules of a class on how to build a t-shirt company–how to source it, how to create buy one get one free deals that get people to buy more, how to upsell after somebody buys a t-shirt to get them to buy two more. I really like that video.
Andrea: Thank you so much. I actually created Lessons.biz because I see so much stuff out there of like “This is how you can make money really fast.” And they’re making money by selling products on how to make money a lot of the time. I always said I want to learn from somebody who’s sold millions and millions and millions of dollars’ worth of something and that’s what I want to learn from.
That’s the whole concept that I’m creating around Lessons.biz, getting the top people in these spaces, in these verticals that people go into in entrepreneurship but don’t have a business background necessarily, like restaurants or becoming a personal trainer or launching a t-shirt line. Their understanding of business might not be super strong but they have their passion idea for it. We want to give them a total ridiculous roadmap, like, “You do this, then you do this, then you do this, then you do this.”
Andrew: Like right down to where you should get your t-shirts.
Andrea: That’s right. Buy your blank t-shirts from Mission Imprintables, for sure.
Andrew: I’m looking at it. This is one of those places where you would do better if you did have an online network. Your offline network is good, but that’s not going to lead to sales here. I’m looking at where you’re getting traffic and you’re net getting that much traffic on Lessons.biz. I see Mixergy is sending you traffic. I see Rainmaker.FM is sending you traffic. I’m assuming one of you guys did an interview on their podcast network. I don’t see a lot of traffic coming in. Where are you guys getting your customers?
Andrea: We just launched this. Right now we’re getting our traffic through paid Facebook ads and then we’re doing podcasts. You’re the first to know this–we’re actually converting one of our websites, MentorMojo.com to be a free site just for lead gen and you just have to put in your email address and you can watch like Dario Meli from Hootsuite is on there and Jake Nickell from Threadless and Jonathan Teo from Binary and a bunch of awesome badass entrepreneur gave us crazy, such legit good content.
That will do a lot of lead gen for us. And then we also have already struck some deals with huge people with massive lists to do an affiliate campaign. I think you interviewed Emerson Spartz, who is like my best friend. He actually is like my little brother.
Andrew: Is he? I was wondering how you even knew about him. Most people don’t recognize his brilliance. Except when The New Yorker piece came out about him, suddenly the world blew up and took notice of him and now they’re all ignoring him again. So, you know him that well? That’s how you got him on the site. You guys are friends.
Andrea: Yes. He actually invested in Lessons.biz. I never take investment. So, for our listeners who don’t know, Emerson Spartz is like the number one world leading expert in internet virality. He is insanely–
Andrew: He’s got a bunch of these viral sites that probably the audience never heard of but have been on his sites at one point or another. That New Yorker piece is fantastic if you want to Google it. How do you know him? I guess I know why. You were both in World in Warcraft businesses, probably.
Andrea: We actually met at Summit. And then we became like super good friends and started traveling all over together. He became like my little brother. Anyway, he is going to do a campaign where he pushes a lot of traffic our way. He’s one of those guys who can push millions and millions of hits around. I’m not allowed to call it that anymore. He can push millions of visitors around.
Andrew: You can’t call them hits? I had never noticed. Interesting. That’s why you needed a little brother like him.
Andrea: That’s true.
Andrew: I want to end with a view. But before we get into that, I should just say thank you to you for doing this interview. How did it feel?
Andrea: It felt good except for I hate talking about going into debt.
Andrew: Why? Why do you hate talking about that?
Andrea: It makes me… It just hurts my soul. It was such a bad feeling. It’s such a bad feeling time. And for your listeners, it’s really normal, I think, when people experience failure in business to beat themselves up over it. I did that really a lot. For anybody that’s in that position where they’re at a stumbling point, you’re going to get through it and just spend as little amount of your mental bandwidth as you can feeling badly about it.
Andrew: It’s hard not to, but you’re right. I’d like to see you be more comfortable talking about it. I’ll tell you why. As an interviewer, what I’ve noticed is the way that you get the audience to care about you is to talk about your struggles and then show how you overcame them. Then they root for you. Then it’s like–I’m trying to think of a video game analogy. I don’t play video games enough. But that’s when they get on board and they root for you. I understand why it’s painful.
Andrea: Yeah. I hope they root for me anyway.
Andrew: I think they will. I think they’re inspired by what you’re doing. Who knows? Maybe I got carried away. Maybe I was making googly eyes for a woman who I’m really crazy for, apparently. The audience will tell me. They’re so freaking critical. I’ve got one guy now on Facebook. He’s beating me up because I interrupt people. At first, I was really listening to him because I want feedback. I want to improve.
Then when he was saying, “In every interview you interrupt, that’s the problem.” I realized he’s absolutely wrong. I have to interrupt. I’ve got to keep stuff on track. Otherwise, we end up talking on one topic for the whole freaking hour. Part of my job is to interrupt. So, I’ll take whatever feedback I get from the audience with a grain of salt.
All right. If someone wants to follow you, should we send them to Twitter? No. You have like 500 followers on Twitter. You’re not cultivating Twitter.
Andrea: I’m starting to right now. So, go to AndreaLake101. And I am putting up a new website. It is almost finished on AndreaLake.com. I’ll make sure it gets up this week.
Andrew: All right. And they can check out Lessons.biz. Thank you so much for doing this interview. Thank you also to DesignCrowd.com/Mixergy, Toptal.com/Mixergy and thanks to Dan. I think Dan is the one who introduced us, right? No, there’s a fan at your company who introduced us.
Andrea: Katie.
Andrew: Katie. Thank you to Katie for making this happen. Cool. Can we see the view one last time?
Andrea: Absolutely. I’m so excited. I’m going to go hiking in a little.
Andrew: So inspiring. This is the way that we should be living.
Andrea: Pretty good stuff.
Andrew: Thank you. Bye.
Andrea: Bye.
