Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am founder of Mixergy.com, home of the ambitious upstart and in this interview we’re going to find out how a Mixergy fan built a profitable e-commerce site and sold. Jordan Gal is the founder. Actually you’re not the founder but we’re going to talk about that in a moment. But he ran YCA Shops with his two brothers. YCA was a collection of stores that sold niche products like solar lights and hammocks.
We’ll find out about what happened there and we’ll ask him about his current company Carthook, which automatically turns your abandoned carts into paying customers; e-commerce stores you need to take a look at it, Carthook.com. All right before we officially start, I have to say that this interview is sponsored by AndrewsWelcomeGate.com. I had a problem that maybe you in the audience can identify with. People were coming to my site and then they were disappearing. I didn’t have an opportunity to tell them about my newest interviews. I didn’t have an opportunity to tell them about how the site evolved and grew. I needed to find a way to connect with them so I started asking for email addresses. You know the problem with that. You ask for an email address.
No one gives it because there’s not enough of an incentive, because it’s not clear enough, etc. So, my team and I spent over two years coming up with the perfect landing page, on that increases conversion magically almost. And now I’m making it available to you. If you want to see what it looks like and use it on yours site go to AndrewsWelcomeGate.com AndrewsWelcomeGate.com. All right, enough about me and my sponsor and my message. We’ve got to get to Jordan. Jordan welcome.
Jordan: Thank you very much for having me Andrew. Very excited to be on.
Andrew: At your height before you sold, what size revenues were you guys doing with this collection of e-commerce site?
Jordan: So, we launched and within 12 month made right around $500k in revenue and then sold it. The whole thing was about 12-13 months.
Andrew: I heard that you worked as an investment banker and towards the end of your work there you kept hitting refresh on a webpage or some site. What were you hitting refresh on?
Jordan: I went to University of Michigan, went to business school and it was a great experience but it funneled and closed my worldview off to business. Whereas just banking or consulting, those were the only two industries available. I went into banking and I hated it so, so much. I was that guy that the day that bonuses were supposed to hit, I was refreshing my bank account. As soon as I saw the money hit my account I stood up and walked into my boss’ office and gave him a look and said, “You know there’s got to be one guy and I’m him.” So I quit right then. I didn’t even make it through the two year program. It was just not for me.
Andrew: What was it? Do you have an example of something that made you say, “This is not the life that I want for the rest of my life?”
Jordan: It was such disdain for your time and for your things in your life outside of work. They weren’t bad people. It’s just the way it worked. There was no correlation between how much you worked and your performance. It was all political. I have a story. The first weekend I was finally able to get away to go visit Michigan for a football game a manger, manager and director, just needed to give me a few comments on a document and he just sat on the phone for hours. He knew I needed to get to the airport and it was simplest two minute thing and he just let me sweat it out because he just didn’t care. I just did not like that sense of no control over my life but it’s not easy because Wall Street pays you enough to make you think about. I don’t regret leaving but it’s a tricky thing.
Andrew: Before we get into the bad start up that you launched and why it didn’t work out. I’m curious. You had a background where you grew up in an entrepreneurial family. I’m surprised that you became a banker, though now that I see that school really guides you towards investment banking or consulting I get it. But, the background was one of an entrepreneur. What did your dad do and how he bring you into his work?
Jordan: Yes. My dad is the classic, immigrant entrepreneur. We moved from Israel when I was six years old and he, classic story, came with three bucks in his pocket, a wife, three kids, no idea where to get started. He kind of worked with a few Israeli people and he knew he wanted to work for himself. So, he found this business in Long Island. It’s a really interesting business actually. It’s property tax reduction so what we do, the business is still running very nicely. It’s run by my older brother and my dad still. We represent residential home owners to challenge their property taxes and if we’re able to get them a reduction, they pay us 50% of the fee.
Andrew: Only if you’re able to get a reduction in their property taxes?
Andrew: That’s great.
Jordan: It’s such a great sell and it lends itself very nicely to direct mail. So you bomb out hundreds of thousands of letters. You get contracts back and then you do the work for them.
Andrew: What do you do that you can so dependably reduce people’s property taxes.
Jordan: On the surface, what you’re supposed to do is challenge the value that the county municipality says it’s worth. You pay based on what they say your value is. If you challenge it with comparables and with argument, on the surface, that’s what you’re supposed to do. In reality it’s very political, where if you bring enough clients to the table, you put enough pressure on the town that they kind of give you a lot without you actually having to do the arguing. It’s kind of a give and take between the politicians and… It’s great because government is kind of slow and dumb, but it’s bad because they can kind of do whatever they want. There have been years when they just make a rule change and it severely impacts the business.
Andrew: I see. It’s not so much about the case you make as it is about the relationship you have with the person who might or might not be in the right mood and the number of clients that you bring over. I see.
Jordan: Yes. You nailed it. It’s the relationships.
Andrew: As I understand it, after you quit your job on Wall Street, you went and spent some time in the family business and helped grow it. Do you have an example of one thing that you did that helped that business grow before we get into the internet stuff?
Jordan: Sure. I worked in it in high school a little bit. After I left the Wall Street job at Solomon to join my father, there was a lot of potential there. My dad’s kind of old school and he had been doing things the way he always had and it was working. When I came in I really took a look at the marketing, which… It’s funny it’s the most important thing in the business, the direct mail that goes out. I really took a look at it in a more modern viewpoint and made big changes and added color.
One of the things I did that made a big difference was we took our previous clients and we put pictures of their houses and how much they saved and the street name. We didn’t put the exact address because for privacy. Then we would Geo locate it so that someone who got a letter from us would see people right around their surrounding area and that caused so much emotion. “Hey, this guy down the street saved 1200 bucks.” Just bringing that sort of modern approach to the copywriting and to the direct mail pieces and color and a bit of technology into it. That’s one piece that made a big difference.
Andrew: Now I understand why you as a Mixergy fan liked the Dane Maxwell course on copywriting so much. You saw the impact that good copywriting could have on a business.
Jordan: Yes. It’s the same thing as the online bug. Once you convince a perfect stranger to give you money over the internet just based on what’s on the screen, it kind of opens your eyes to, “Hey, I can make a difference in the things that I do on the screen.”
Andrew: Speaking of making a difference. A lot of entrepreneurs say that they get into business, they start companies because they want to make a difference in the world. You have a different approach.
Jordan: I do. I have a hard time with that. I think a lot of people that say that are either A) full of it or B) they think it’s the right strategy to give off that type of a vibe or C) they have crossed over the line of financial stress and are now safely ensconced in a position where the can say say I’m doing this for the good, to help people. I think, generally speaking, 95% of entrepreneurs like myself, we do it for money. That’s why we do it. I don’t think there’s anything wrong with that at all because, at least for me, I don’t do it for fancy cars. Money is for freedom. I think that’s…
Andrew: What type of freedom are you talking about?
Jordan: The type of freedom that’s the exact opposite of that Wall Street job.
Andrew: [laughs] Freedoms to…
Jordan: To live your life and to… Look, you don’t work less as an entrepreneur. You often work more but you have a very different place in the world when you’re your own person. I love your opening line: “freedom fighters.” I think we hear it very often and we overlook the significance of what you’re saying there. It’s fighting and it’s for freedom. It’s a worthwhile thing and money is just what gets you there and gets you the freedom. There’s nothing wrong with trying to make as much money as possible for your family and for your life. My life right now, I’m in Portland, Oregon. I’m in a [??]. The past 18 months my wife and I and our one daughter and now two daughters, have been traveling and staying a month or two in each city. San Francisco…
Andrew: Wow. You’ve been traveling with your wife and two daughters.
Jordan: And two dogs. [laughs]
Andrew: And two dogs.
Jordan: We did San Francisco, Berlin, Denver, Seattle, Portland and Miami to basically find out where we wanted to move. We kinda interviewed these cities and now we just ended the trip. I just got to Portland a week ago. We just got a house here.
Andrew: You think that’s going to be the place?
Jordan Gal: Yeah. Yeah. That’s… It wasn’t easy but I worked full-time. I launched Carthook while in Germany.
Andrew: I get that. That is the kind of freedom of movement that you wouldn’t have at any other job. You can’t say to most bosses, “You know what? I’m going to interview as many cities as I want around the world to figure out where I’m going to live and make my own schedule as I do that.” No, you have to stick around for a while. I get that. I get exactly what you’re talking about. That is a kind of freedom that most people don’t talk about. Instead what they do is pay lip service to doing good in the world.
Frankly, I have to be honest with you. Unless you want to make it your thing, where you buck the system and make a point of speaking truth, think for most of us, it makes more sense to just say, I’m here to change the world and have an impact, even if we don’t feel that way.
Jordan: Yes, I agree.
Andrew: I think you’re right that there comes a time in your life where you can stop hunting for money and stop thinking that way, and move towards doing good in the world. I feel like the first part of my life was nothing but mercenary money. Where is the fricking cash? I did a greeting card site. I have no fondness for greeting cards, but I went there because that’s where the money was.
I see what you’re saying. I see your motivation. I see the background. You decided you were going to start your own company. What did you do with your brother that we later found out was not the right business move?
Jordan: After a few years at the family business, we grew that to a little over $1 million in revenue annually. That business is still going strongly and we’ve extended it. But working with your father? After a while, you start to look around and say, “You know what? I think it’s time for me to go out on my own, to do my own thing.”
I launched a political website. It was right around the 2004 election. Whatever it was, I was very into politics and that side of things. It was an aggregator. I don’t know if you’re familiar with “Real Clear Politics,” but it was similar. It was interesting, and it was passionate, and it was an absolute disaster. It was just a disaster.
Andrew: You didn’t know it was a disaster until you talked to Robin Richards? Or did you know before then instinctively something’s wrong here?
Jordan: I was a bit delusional in thinking that it was going to work out anyway. I was in the mindset of let’s build this thing. We got to 50,000 uniques a month or maybe more. But the revenue wasn’t there because it was all advertising-based. We kept saying, we’re going to raise money. Then we’ll expand into other niches. Into sports, into finance. We’re going to get investment. We didn’t focus on just making money, and being profitable, and solving problems for people.
We had a meeting with investor Robin Richards. Really smart guy who’s done mp3.com and a bunch of other things. I think it was because the person that connected us was a good friend of his that he felt an obligation to be honest with us. His honest feedback was a giant sledgehammer, Gallagher-style explosion of a watermelon.
Andrew: What did he say?
Jordan: It was good. He said, you don’t have anything unique. You got no technology. You have no business model. You don’t have experience in advertising. He blew us out of the water, and it was a good thing. We came back from that trip, I think it was in Michigan, and we looked at each other. I was running it with my younger brother, [??]. We looked at each other and said, “Maybe it’s time to think about something else.”
Andrew: That something else was a site and business that your older brother was working on. What did he feel about the business?
Jordan: While my younger brother and I were running this political site, and I had all these high-flying dreams about getting investors, and seed money, and all this other stuff, my older brother started an ecommerce business. My older brother, Jonathan, is more practical and more risk-adverse. It often works out better for him.
He started an e-commerce business. He got disillusioned by it. It wasn’t picking up steam. He got a little bored. When my younger brother and I said to ourselves, maybe we should look at something else. We looked over to our site, to our older brother, and said, “Hey, if you’re getting bored of this e-commerce thing, why don’t we give it a shot for a few months? Let us take over it. Let’s see what we can do.” That’s how we got into the e-commerce business. Wasn’t this big strategic move or anything.
Andrew: What was he selling on these sites?
Jordan: He was selling …
Andrew: Actually, it was one site at the time, wasn’t it?
Jordan: It was one site at the time. He was selling solar lighting. What my brother had done is he’d taken a look at a few companies like NetShops, which is now Hayneedle, and CSM stores, and Patioshoppers. These companies built out a bunch of individual websites that were very niche. The concept, the strategy, was that a fisherman buys more fishing gear, and is more likely to buy fishing gear, at a fishing store, as opposed to the fishing aisle of a giant sporting goods store. It’s very focused and online.
The way that translates is that you have a higher chance of converting when someone walks into your store when they’re looking for something specific and your entire store is just that niche, and you have a big selection, you have expertise. That was the concept that we copied.
Andrew: That makes a ton of sense. You trust the site more. You feel like it’s your home more. It’s easier to find things because when you search for one word, you don’t end up with that word in a different category, right?
Jordan: That’s right. It gives people the impression when they click on an ad in AdWords, I went, oh, I finally found what I was looking for and they have a selection of 40 different types of hammocks as opposed to Walmart that has three.
Andrew: Of all the things that he would start with, why do you think it was solar lighting and not fishing gear, for example?
Jordan: Oh, it is very straightforward. We looked and did intelligence work. He did, originally, to look at the bigger competitors to look at [??] shops and CSN stores. They both had solar stores and they were both heavily advertising for them.
Jordan: So we put 2 and 2 together and the products were relatively high priced, $50 to $300 and it was very straightforward.
Andrew: Doesn’t it mean though that if they are advertising heavily, then your ads are going to be more expensive?
Jordan: A few years ago it wasn’t that expensive and it was more straightforward. It wasn’t a very deep analysis but kind of gut plus analysis that says. Then we called the suppliers and made sure that we have access to them and can drop ship because we didn’t want to invest in inventory up front and then once it all came together that we can sell it, they are selling it and actively promoting it, we put that together and said good, go with this niche.
Andrew: Some basic research. Why did he lose passion for it, considering how good the idea was, it was so sound.
Jordan: It wasn’t growing very quickly. It was a side business. It was doing maybe a $1,000.00 a month and it wasn’t growing. It’s for a number of reasons. From the site being optimized to the ad copy, there is a whole bunch of things that go into making it work.
Andrew: So of all the things that you could have done, what is the first thing that you did to help the site grow?
Jordan: The first thing was inevitable and nothing would have worked without it. We were on the Yahoo platform when we took over the store and Yahoo’s platform has been around a while. I think it was the original product that Paul Graham sold.
Andrew: Yes. [??], right?
Jordan: Yes. So now it is Yahoo stores and their whole business model was dependent on developers as their sales force and what that meant was that they needed the developers and people needed to be dependent on the developers and what that really meant was you couldn’t do anything yourself. You were stuck. Every little change, it was so inflexible and the whole point of us taking over this business was let’s learn as much as we can and make changes very quickly and it was very obvious immediately that Yahoo wouldn’t allow us to do that so the first thing we did was change Platform to Volution which is more of a do-it-yourself hosted solution that we could make changes ourselves. It gave us the flexibility and control.
Andrew: I see. I hadn’t thought of that. If Yahoo would have made their stores much easier, it would have meant that developers didn’t need them as much and developers wouldn’t have promoted them as much. I see.
Jordan: And that is their sales force, at least, that is my assumption.
Andrew: By the way, I just did a search for Volution here in Google and one of the first responses was Shopify vs. Volution and it’s on a Shopify blog post. Boy, those kinds are good, too.
Jordan: Yes, it is a crowded market and it is challenging.
Andrew: All right. So what did you like about them that made you go with Volution?
Jordan: The most important thing was the ability to make changes ourselves relatively easily. The whole strategy was get in there and see what works and then just learn and make changes, learn and make changes. I was in charge of optimization on the site. My younger brother was in charge of sourcing the customer service and fulfillment after the sale and we couldn’t do that with another platform so we went with Volution. It was good looking. It was relatively inexpensive. We found a great developer that made the changes that we wanted. That was the start.
Andrew: I see and then you added Live Chat next?
Jordan: Live Chat was one of the things that we added. Yes, so the whole approach and one of the big takeaways that I would give to anyone in the commerce game, really a lot of different businesses online, is to settle in and understand that the optimization process, convincing people to buy frequently and efficiently, is a long process. It is not, make one change and everything all of the sudden gets better, it’s an accumulation of changes as you learn that all start to click together that makes it start to work. So we did redesign and we added different features. The live chat was really an interesting lesson in how much control we had over whether people bought or not so we installed live chart which is like Alark. Back then Alark wasn’t available.
Andrew: It’s that box that shows up at the bottom of a web page that people can click on and have a live conversation with a real human being.
Jordan: Right. The truth is nobody talked to us. Nobody cared, nobody wanted to chat with us. The real value in the product was because this was on your site, it gives you a little panel that gives you rows of session data. It said this shopper is now on your store. They came through this ad. These are the pages they’ve been to.
Andrew: Oh so you can watch them as they stroll through your store . . .
Andrew: . . . even if they weren’t telling you explicitly that they had a problem or an issue.
Andrew: You could still see what they’re doing.
Jordan: Right. Think of how addictive that is. You’re sitting at your computer. You hear da-ding, like a little bell. They had a bell like a retail store. So you’d go and you’d watch this person. You’d get all excited. Hopefully he’d buy something. So we did this a lot and what we learned was we kept seeing people take ads that were surprising. People would hit an ad, go right to the product page, and then they would put it into the shopping cart. We’d say, “Oh, this is great. They hit an ad. They found what they wanted. They’re going to the shop. They’re going to check out.” Then instead of checking out, they’d go to the About Page.”
Jordan: Then it kept happening. We just kept seeing, “Why would someone . . . Do we have a link? Is it too obvious?” So what we realized is that they didn’t trust us, right? And that’s one of the other big things for people in the e-commerce space is you have to do two things. You have to build enough trust to convince someone to pull out their credit card, and you have to give them a reason to buy from you. That’s a bit more challenging.
So what we did is we looked at our About Page and said, people are going to the shopping cart, and then they’re saying to themselves, “Who are these people who I’m about to buy $200 of solar lights from.” So we optimized our About Page. We put in a picture of the three brothers. We talked about how it’s a family business. We gave our five point pledge. We added testimonials.
And then we started seeing people go from cart to About Page and then back to the shopping cart to check out and finish. There’s like wow. There’s a lot of different things on this site that we don’t think about that we can change and have a nice effect on people actually converting.
Andrew: You said it’s even harder to convince them to buy from you specifically. What do you do to do that?
Jordan: Unique selling proposition is the short answer. One of the difficulties we had was our products were available elsewhere. So when you’re drop shipping and you have other people selling the exact same product, you have to give people a reason to buy from you. So our unique selling proposition was like three point . . . always free shipping both ways, family values, and expert customer service, something to that effect.
Andrew: I see.
Jordan: Yeah, so we started to build things like that on top of the site to give people a reason to buy from us over other people. And the other thing we did was we changed our product names.
Andrew: I was just going to say that. If I wanted to compare, I could. Here’s the product name. It’s called Solar Powered Accent Light.
Andrew: That’s such a generic name. If I wanted to pop that into Amazon to see what Amazon charges for it, I would have basically a generic search in there that would show up anything related to that.
Andrew: That was intentional.
Jordan: That was intentional. Well, not to make it more generic but to make it more specific. So one of the funnier things that we did . . . My older brother came up with . . . People would do searches by model number and then they’d look on your site. They’d go elsewhere and find it elsewhere on Amazon cheaper. So we had one light called the Super Bright High Intensity Solar Spotlight just to give off the impression that this is the brightest thing you’ve ever seen because that’s what people wanted.
Andrew: I see. So the description is more specific but the name is less specific so they copy it, put it into Google, and see who else has it.
Jordan: Yeah. In this name, the name was the most specific part so they couldn’t go search for that exact thing. And we didn’t give the right model number. We called it our own model number, internal number.
Andrew: That makes sense.
Jordan: Yeah, that was a big . . . one of the big breakthroughs, not so much the naming but learning what people wanted.
Andrew: And I do see that you put free shipping both ways throughout. Even if it was redundant, over every product name or under every product name and over every product image there was a period there where you were showing the free shipping both ways.
Jordan: Yeah, free shipping is this weird thing in people’s minds. It’s the number one cause for abandonment. People will pay more for a product if it has free shipping than they’ll pay less with shipping added on. It’s a very strange thing, but we took the approach that free shipping both ways, especially these things are solar lights here. The quality is questionable in the buyer’s mind.
So when we said both ways. We wanted people to know if this thing doesn’t work for you, you send it back to us and it doesn’t cost you anything.
Andrew: I do see throughout email address, email us, email us.
Jordan: Yes. That’s a really big thing, and the phone number you’ll see all over the place.
Andrew: I see it, 888-420-0882.
Andrew: You didn’t have a big customer service department, did you?
Jordan: We didn’t. We just had one of us. But all of us picked up the phone. Yeah, that’s a Grasshopper number.
Andrew: My old sponsor. Actually one of my first sponsors here on Mixergy, yeah.
Jordan: That’s right. That was huge for us, and that’s another huge lesson for e-commerce. We use the phone, specifically the phone, less email and all that to understand what people wanted. This was probably the single biggest breakthrough in our business. We promoted the phone number and email and everything just to get people in touch with us because when they got touch with us on the phone, they were buying, it was like 90%.
But what happened was we learned unexpected things on the phone. But what happened was, people would call us and we’d hear the same strange question over and over. People would say, will this reach my flagpole? And we were like why would you care? Why do I keep hearing that twice a day, that’s strange. Well it turns out, that this is a very large country and a lot of people have flags, American flags, in their front yard. And not everywhere is a city or a standard suburb and the way the rules with the American flags go, you either leave it lit at night or you bring it in the house.
Andrew: Oh I had no idea.
Jordan: We’re from New York, like what?
Andrew: Yeah, and frankly in New York, it’s lit all the time.
Jordan: Right, you don’t really have to worry about it. You have street lights, you have everything, but out in the country, out in places where you have bigger space. So we kept hearing this, and we said, “Okay, this is strange but we have to listen. So we took that type of feedback on the phone and then we started to reflect it on the website. Right, because if you have people calling you once a day with a question, there are 100 people on the site that have the same question, but aren’t calling.
Andrew: I see, and so that’s why you have the solar flag lights, for example.
Jordan: That’s why we have the whole category called solar flag lights to send goggle ad words to that category. And that’s why the first thing you see, I mean, the site is different now, the guys that bought it haven’t done a great job maintaining it, but our best selling light, the first thing you read was, will reach up to 25 feet for your flagpole. Right. And then what we did is we looked for manufacturers that have flagpole lights, specifically we went to China. You know, we called everyone and they had lights that attached right to the flag pole that goes right to the flag. And those two, the spotlight and the flag light that sticks on were, that’s what changed the business. We went from a thousand bucks in revenue the first month, to 2,000, to 4,000, to 8, 15, 30, 45 and all the way up to 65,000 in a month.
Jordan: And it all started off by understanding what people wanted because we listened to them on the phone. Reflecting that on the site, all of a sudden people started buying five a day, ten a day. You know, it really changed the trajectory which gave us the confidence to start spending more money in advertising and that’s when things started going up, up, up.
Andrew: Before we get into ads, I hear you about the phone number and the power of having it on, but it seems like a really big burden to be on call all the time where any stranger out of any time of the day, there in the bathroom, the can call. It feels really burdensome to have all those calls come in. What do you do about that?
Jordan: It’s a much bigger burden to be broke and have your business fail.
Andrew: I see. So you just said, I have to do this because I will not fail.
Jordan: Yes. We were in a situation where we wanted to do anything to make it succeed. And the truth is, it’s kind of fun. It’s fun selling people. I mean, look, these are solar lights we were drop shipping. We had never seen these things, okay? We’re explaining and how to reset the battery and like, go into your closet that’s dark and hold the solar panel up to your chest and turn the, we were, I mean, it was fun.
Andrew: Because you were figuring it out as you went along, you had no guide book that told you that.
Jordan: Right, we would call the manufacturer and say, this weird problem is happening, how do we do it? And they would literally tell us, tell them to go into the closet with the light off and hold the solar panel against their chest and we were, Okay?
Andrew: And if they do that, what happens? Oh that’s the way to test to see if it’ll go off in the dark.
Jordan: Yes, it like reset the battery. I mean, yea, so we were very comfortable talk on the phone. We had a good time with it. We had a saying, we had triple S, sell some. Whenever the phone rang.
Andrew: Sell some shit.
Jordan: Yeah, sell some shit. Yea, so we had a good time with it and when something works, it’s fun. So as we made those types of changes, I mean, things started working.
Andrew: And you take credit cards over the phone, someone would understand that they could hold the light up to their chest in the closet and they’d feel comfortable and they’d say alright, Jordan here’s my credit card and you’d sit down and type it in.
Jordan: Yes, and it wasn’t fancy. We would literally go to the site and check out as them and ask them for all the information and then put it in and say oh you should get an email soon.
Andrew: Okay. What percentage of the calls would you say would go to voice mail because one or all three of you were just too busy to handle it?
Jordan: During the day? Very, very few. Maybe if we were out to lunch or something strange, but there’s three of us.
Andrew: And the cool thing about using Grasshopper is that the phone would, all three of your phones would ring and then you could decide which one of you wants to take it. And you also give the impression of size when they call up, they could get dial “one” for tech support, dial “two” for sales, dial “three” for returns.
Jordan: Yes, we had to just go directly to the phone without the impression of size just because we thought it was a shorter path to get people on the phone.
Andrew: I see. Then you start doing ad buys. What’s the first step that you took towards buying ads?
Jordan: The first step we took toward buying ads was actually a few steps back, because what gave us the confidence, we tested ads, we ran ad-words ourselves, and we spent a decent amount of money; a hundred bucks a day, that type of thing, just to figure out what sells and what doesn’t, can we make some money. But we didn’t really pour on the gas until we had the confidence that comes from a steady conversion rate. That’s why it’s backwards to think about the ads first. You actually have to get it in line first, from the ad-copy to the landing page, to the copy on the page, to
the cart, to the check-out, everything needs to be optimized before you go spending money on ads, or you’re just going to spend money inefficiently. So once we did that hard work, and I’d love to get into that.
Andrew: You know what, let’s pause then and talk about that, because that seems really easy, until you realize, “Hey, before I buy any ads, I barely have any traffic, so if I’m trying to optimize for very little traffic, it’s hard to do an AB test, and frankly, installing more AB software and
trying to edit things is just a nightmare.
Jordan: I hate AB testing. I think it’s just a distraction for most people. I think you need a lot of traffic and you need to be in a different place
for AB testing to make sense. People just starting out don’t need the AB test, they need to make changes and watch it for a few days instead of
focusing on this and that
Andrew: …Comparing one to the other and being absolutely scientific, you’re better off just making a change and see if it impacts things. That’s
what you do, you just said, “You know what, I’m going to buy ads to send to this one page and we’ll see if people buy flag-pole lights from it.” If they don’t, then what do you do?
Jordan: What I tell people is that if, when you start off advertising, if you are anywhere near profitable, if you are anywhere near break-even, consider it a win, a success, because if when you start off when you’re relatively dumb, if you’re anywhere near break-even, you have only up to go from there as you optimize the copy and the language and the buttons and the colors and the product images. If you start off at anywhere near break-even, you’re at a great place. You shouldn’t be discouraged, you should say, “Okay, if my ground floor is here, now I’m going to go about the hard work over the next weeks and months.”
Andrew: So what do you change?
Jordan: I was the guy in charge of optimization. I had one brother doing this “yo” and other stuff and my other brother doing the after-the-sale support, so as in my research for optimization, I came across site-tuners. A company run by Tim Ash.
Andrew: I know him; he spoke at one of the original Mixergy Live events.
Jordan: He’s a bad-ass.
Andrew: Did you get to work directly with Tim?
Jordan: I did.
Andrew: He does a really good presentation. What did Tim tell you?
Jordan: I bought his book and understood none of it. It was all math and graphs and went right over my head. And how to apply that in real life. They had a service where they would talk to you for an hour over Skype like this and record it, and it was 500 bucks for an hour and they would just tear your site apart and tell you what you were doing wrong and what you need to do, and then they would send you a recording of it, and then that was it for 500 bucks.
Andrew: You and Tim, specifically, on the phone.
Jordan: I think it was Tim and two other people.
Andrew: So it’s the four of you on the phone, on Skype like this, and they’re saying, “Hey, look, Jordan, this thing’s stupid over here, get rid of that button over there,” all that. You have a recording, and you go to town on your site afterwards after the recording. That’s a great service; I can’t believe he does it for only 500 bucks, that must have been a long time ago.
Jordan: It felt like a lot. It was a while ago, it was maybe four years ago.
Andrew: When you’re getting started, and someone charges you 500 bucks, it feels intimidating.
Jordan: Right, and it’s not to make money back, it’s to learn, so my brothers thought it was a bit crazy to spend 500 bucks, I thought it was worth it. It turned into one of the absolute best decisions, because they gave us a foundation of understanding, not only the changes we needed to make, but why. Certain things like “The home page is not for selling, the home page is for building credibility.” The category page, again, is not for selling, it’s to help people find what they’re looking for. So that’s why we built category pages with sub-categories, made it visual. The product page is where the selling actually happens, and the shopping cart needs to be distraction-free. You want people to focus on a decision between moving forward or not, so you get rid of the left navigation. You add your credit card and your trust symbols. You put your phone number. You put the 1-2-3 step graphic to show them that they only have two more steps to go. You put a picture of yourself. You get rid of the coupon area if you don’t use coupons. You make the checkout button a much bigger, brighter color of button than the continue shopping button. All these different things that just got us into the mindset of, oh, we have a lot of work to do, but we can affect these things.
Jordan: So that’s what got us on the path of, we are empowered to make these changes and it makes a difference so that’s what we did. We just put our head down and got better images, wrote better copy, focused on benefits instead of features, added reviews, put our return policy, just all these individual little things that alone don’t make a difference but all together start to come together to build up enough trust combined with a unique selling proposition so that’s when things started to work so when we spent $100 on advertising, we’d make $500 in revenue, and then when we spent $200, we’d make $1000, and it was straight forward so then we said, “Okay, now we’re idiots if we don’t spend more money.” That’s when we hired a professional adverts guy and turned on the gas because when we spent $10,000, it was the exact same thing. We got $50,000 in revenue.
Andrew: But the reviews, you guys have a lot of reviews at least on the site right now. At first did you do what Alex Ohanian and the Reddit guys did which is go in and create sock puppets?
Jordan: No, no we didn’t. The reviews are actually one of the big pieces of optimization that we set up. We need to build trust because people don’t know us and they’re solar products let’s add reviews. When we added reviews, we then had to come up with ways to get reviews.
Andrew: Yeah so what’d you do?
Jordan: First we did a manual process where we’d ask for reviews. Then we tried to get a little smarter where we’d say, we’re giving away a $100 Visa gift card to one person who leaves a review so leave a review to enter, and we did that for a few months. Then we found a company, a piece of software that automatically sends out a request for review at a given time, two weeks after purchase, ten days after purchase.
Andrew: I see.
Jordan: And that thing blew up our reviews, and when you have 80 reviews on a lighting product that are 4 1/2 stars total, people don’t have that many questions. They read through that. It convinces them to buy so that improved our conversion rate greatly, and then the hidden piece that we didn’t expect is that people that came back to write reviews, they bought.
Jordan: They bought again.
Andrew: I see.
Jordan: Which kind of blew us away. We said, not only is this piece of software increasing our conversion rates, it’s making us $2,000 a month from people coming back that already trust us and are buying more. That’s actually the piece of software that I copied to make Carthook, but we can get into that later.
Andrew: It’s kind of cool because you also allowed people to add images. The flagpole image that we talked about earlier I think was photo shopped. You just took a picture of a flagpole… It was, right?
Jordan: If it was photo shopped, it wasn’t from us. It was from the manufacturer.
Andrew: Oh, okay, it seems like what they did was they took a picture of an American flag, they photo shopped their product on it, and they lit it up to show people what it looks like. Totally fine, but in the reviews, somebody took a picture of their own flagpole and showed how they use it.
Jordan: Yep, and that’s much better.
Andrew: And they showed, look at this, daytime and nighttime so you can actually see what it does.
Jordan: And that is worth gold. We requested that specifically, but that is optimization gold especially when you sell products that people can find elsewhere if you have different and better images, it’s much better for you.
Andrew: The U.S. Army I think bought it. Is that right?
Jordan: They did. We sold to a base in Afghanistan which was awesome and painful. The process of selling to the U.S. military… Can you even…?
Andrew: I’m assuming they went to your website, filled out a form with their military credit card, and got… No, it doesn’t work that way? How does it work?
Jordan: It doesn’t work that way. It’s, oh, this looks great. We would like 50 of these things, and we obviously want that to happen and then they send you their list of requirements. So, we need your Dun and Bradstreet number, and we don’t have that we’ve got to apply for that. And we need you’re U.S. government approved vendor number. We don’t have that, we need that.
Andrew: All that just to sell 50.
Jordan: I think the order was somewhere around $10,000 so it was worth it, but it was painful and it maybe took them about 90 days to send us a check, but it was a cool experience and we were obviously proud of it.
Andrew: You got to triple S it though. That’s a lot of work to get to that triple S.
Jordan: Yep. I just love that I have Andrew from Mixergy saying, “triple S.” My brothers will be very happy.
Andrew: How about I say the whole thing, sell some shit.
Andrew: I like that.
Jordan: Right as the phone rings, right as you’re about to say hello, you just hear in back of you from your brother, “sell some shit.”
Andrew: Yeah so much better than the stuff that most people hear in their heads which is, oh, what if I fuck this up.
Jordan: Yes, not as good.
Andrew: All right, at what point did you start creating other sites?
Jordan: Okay, so we had the success with the Solar Store, but the intention the whole time was to build a big business because as we talked about at the beginning of this conversation, we want money. We’ve got three brothers, all ambitious. That equals a business that makes millions of dollars so the intention was to copy the bigger players hopefully we get bought by them and build out a network of these niche sites so we did the same type of dirty research to figure out what we should go do next so we ended up opening a hammock store, one for Adirondack chairs, one for electric fireplaces. I think that’s it. There may have been one or two more, and it was great. Strategy was in place. It didn’t work out.
Andrew: Why not?
Jordan: It didn’t take off the same way as the solar products, and we tried very hard to crack the code. The hammock store probably got somewhere up into $15,000 a month, but nothing took off the way the solar light store did, and that was very discouraging, and combined with the amount of customer service issues on the solar store because these products are from China and the quality was not great, we start to feel a lot of pain, and then when we projected outward what does this business look like if it’s doing $5 million a year, it looked like an enormous amount of pain.
Andrew: An enormous amount of customer service work which meant you had to hire more people. An enormous number of customer questions…
Jordan: Office, right, rent expense, and it’s retail. You’re not making that much margin. You’re making 20%, 25% if you’re doing well, and then you look at that in the future, you say we need to grow continuously for a long time in order to get there. It became less attractive.
Andrew: First year you sold how much?
Jordan: Right around $500,000.
Andrew: $500,000 so it seems like… Well you’d have to get to ten times that you’re saying in order to make… But you get ten times that based on the margin you’re talking about you end up with a million dollars in profit in a year.
Jordan: You’re not wrong, and I don’t disagree at all, and I would have agree at that time too. Look, first 12 months, $500,000 where the first three or four months totaled less than $10,000. It was fast, and it was great experience, and I don’t have a doubt that the next year would have been bigger and the year after that would have been bigger, but I think we became a little bit disillusioned by the math. Then the thought crept into our heads of, hey, maybe somebody wants to buy this thing and we can sell it and move onto the next thing.
Andrew: And so you contacted a broker.
Jordan: We did. We had this conversation. It wasn’t anything dramatic. We just said I guess we would consider it depending on the price, blah, blah, blah. I contacted a broker, got on the phone with him, and that week, seven days later, I was talking to a potential buyer, and a week later, we had a letter of intent.
Andrew: Really so like in two weeks you got a letter of intent?
Andrew: Why do you think it was so easy?
Jordan: Because it looked very attractive and you never know. It’s funny when we see companies buy these startups for giant sums of money. I love to think about Starbucks buying La Boulange. You’re familiar, San Francisco?
Jordan: $100 million.
Andrew: That’s what they paid for it?
Jordan: I think they paid $100 million for a few cafes in San Francisco. For the acquire, now Starbucks is rolling out La Boulange food across the country, and now I actually want to eat the food at Starbucks.
Andrew: I see.
Jordan: Imagine that happening all over the place. Imagine what that does to their stock price. $100 million looks like nothing so it’s a similar situation, a lot less zeroes, but their acquire had been building a few e-commerce stores themselves, they were a packaging business, and they saw this as an opportunity to expand and to learn so one of the more interesting pieces of the sale process was when our buddy, Kevin, who’s a great guy from the company that bought us, came to visit us in New York to do due diligence, what sold him, what totally the finished the judgment of should I buy them or not was when he saw how we worked. Everything online, everything in sales force, everything in backpack, base camp, Volution, everything nimble, everything modern. When he saw that and they were not working that way at all, it was almost worth it to them to buy us just to incorporate that into their business and their processes, and that’s where the conversation really ended up, can you teach us how you’re doing this whole thing. Everything’s web-based and affordable and month to month. Yeah, that was very interesting.
Andrew: What was his business? I’m not seeing much about him. His name was Kevin LeCavalier?
Andrew: Yeah, LeCavalier?
Jordan: Yeah, Le Cavalier. They had a big store that sold faucet or sink type of equipment and maybe another one that I can’t recall right. Yeah, but it was more old school. It was like a .net framework and a lot less nimble and their customer service was different. Just think about how you operate your business. You assume everybody uses Google Drive and Skype and Google Hangouts and it’s obvious but not to everyone.
Andrew: I see. How much did he buy the business for?
Jordan: I wish I could say it was a whole bunch of money but it was lower six figures, right around $200k.
Jordan: It’s one of the things I thought about in this Mixergy interview if I’m being entirely honest. My ego wants to come on here and say, “I just sold my company for $40 million bucks and how bad ass am I?” But the truth is it’s not like that. I’m still very much in the hustle. So, this sale was a great learning experience. Look it gave some money but not enough. It wasn’t life changing but to go from zero to sale was an amazing experience and it gave a lot of confidence to the fact that yeah I can do that again.
Andrew: I think that’s impressive and did you guys do an asset sale or a company sale.
Jordan: The domains, the yeah, everything.
Andrew: You kept the business, which means if there was any secret liability they wouldn’t take it over because they only brought the assets. Is that what you mean?
Jordan: No. They took over. It’s a little complicated and lawyerly, which was a learning experience but painful. No. It was just complicated to sell the LLC. We had a few other things going on and it was just easier to do an asset purchase but they assumed all liability and a lot of things that normally go along with the company sale. We just made it a little easier through the asset purchase.
Andrew: It is a much easier process when you do an asset sale because the buyer knows what they’re getting. Two, so they don’t have to as much due diligence on it. There’s no surprises for them. What about when it comes to taxes? What are the taxes around that? For some reason I don’t know it. Do you pay, capital gains tax on the money that you get from an asset sale?
Jordan: I’m not tax expert and I despise this side of business. I hate even thinking about it and all the forms and state Connecticut stuff.
Andrew: But it can have a dramatic impact on how much money you take away from a sale.
Jordan: I have my trusty account that handles that sort of thing but we just passed everything through the LLC to the individuals. We just dumped on as many possible expenses. This is my rudimentary understanding of tax implications and we just minimized our tax burden by dumping on as much of the expenses of the overall LLC as opposed to just the website things and minimized our actual gain and distributed that out to the partners equally. It had a relatively minimal effect on our personal income tax.
Andrew: I’d love to hear an accountant’s take on this. Does and asset sale result in roughly 50% taxes or is it closer to 10%. I think an accountant would probably know that answer fairly quickly.
Jordan: I think more relative is the personal income situation. So, if I make nothing and this is the only income I have that is one thing. If I’m making $500,000 personally and this sale and my portion of it from the LLC is a distribution of a $100,000, it has a different affect. I think it’s where it ends up and because we didn’t pay anything at the corporate level.
Andrew: It definitely goes back to you on a personal level but still the amount that you pay differs. I think. Well, we’ll get some feedback. So, when you said your next idea was to copy what you saw worked but it’s not an exact copy, right? I don’t actually see where the copy, I love copy cats I think it’s fine. I just don’t see where the copycat comes in.
Jordan: Sure, I’ll tell you. So generally speaking, one of the biggest regrets I had with e-commerce business was that we did all this work. We had something like 2-3000 people that purchased from us and it was worth nothing. We did all this work and I said to myself, “If I had just done all this work on a product with a recurring revenue imagine where I would be right now. I would just be in a much, much healthier situation which is what drove me toward software and software as a service model. I’m not a developer. I don’t do any code. That’s the business I wanted to be in so when I thought about what type of software to have built and sell. I thought back to my experience in e-commerce, because I thought that’s where I could add value and answer questions and actually add value on top of the software. I thought back to the software that we used and that review software was one of these things where every month you look at your numbers and that number $50 or $80 a month, you would look at and you would justify immediately.
You’d say, “Not only does this cost 50 bucks, not only do I look on the screen and I know that it brought me 81 reviews and $1400 in revenue, it’s quantifiable, I will never get rid of that $80 expense.” I wanted to be that guy. That’s the position I wanted to be in in someone’s mind. That review software isn’t just review software, it’s also abandon cart software. We just couldn’t use it because it’s a dumb product and we optimize our checkout process to have no registration. We for forced an anonymous check out because who wants another account and password, and this wouldn’t work with that setting. I said to myself “I’m going to build that product the way I would want it” and that where the coping comes in, that’s where the original idea came from.
Andrew: What does someone even need abandonment software? Can’t they just say, “I’m going to ask people to give me an email address before they check out.”
Jordan: Capture the email first of all, good luck capturing the e-mail, and we capture it as it’s being typed so it does require a button click. It is hugely important in a situation like Volution, ad right here comes my experience in this, because it’s a one page check out. If you have a one page check out, there is no button to be clicked except the ‘Buy’ button. You couldn’t use abandon cart software this way.
Andrew: I think our [??] is the first time I discovered that it was even possible. You capture someone’s e-mail address as they are typing it in to the checkout page, and then if you don’t hit submit, you still have that e-mail address to give to your customer. That is amazing and I had never discovered it before, I think it was you personally who told me about this or someone internally here who told me about that.
Jordan: So here’s the thing, you don’t give that e-mail address to your customer. What we do is we e-mail the visitor on behalf of the merchant because the only reason this is legal is because you’re e-mailing them in an attempt to complete that original transaction that they started.
Andrew: They can’t start marketing to that person.
Jordan: They can’t add them to the list, so it’s a little tricky on that end. That triggers an e-mail campaign. The first e-mail goes out about 60 minutes after abandonment, and 24 hours later, and five days later, and it works.
Andrew: It’s freaking brilliant. This is the business you were meant to be in, more than selling lights.
Jordan: And it’s quantifiable. That’s by far the best piece. When e-mail people, because I’m still doing it manually, I e-mail people and I say, “This month, you recovered $384.16, I will now charge your credit card 99 bucks” and they say “No problem” because it’s quantifiable. That’s what I’ve been working on since January.
Andrew: The site looks beautiful, much prettier, much more modern than the solar panel site. Who did this design?
Jordan: The solar light store is old, a few years. The guys who took it over didn’t have the same design, they didn’t stress design as much so it’s stagnant. You’re looking at a site that looks the same as it did 4 years ago. I got lucky. A lot of success in business requires some luck, I got lucky. When I was in San Francisco during this big trip I took with my family, we just happened to live a block away from a family friend of my wife. He is a really talented, smart, sharp kid, Charlie, and he’s the developer, he’s the designer, he did everything. He built the product, he built the back end, he built the front end, he does the design, the guy is ridiculous. He works at Onke[SP], that robotics, artificial intelligence company that Apple is close with. They have those remote control cars that think. So I got lucky. This guy is amazing, and I made my own luck by either taking him out to coffee a bunch of times and just espousing my general business outlook and philosophy. Before I left town, he said “Jordan, I have a lot of design and development experience, I don’t have business experience and I want it. If you want to do something, I’m in.”
Andrew: Do you guys cull in the business?
Jordan: We need to formalize it more than we have, but he has a piece. Right now we’re doing revenue sharing just to keep things simple, so he has a piece of the revenue.
Andrew: So you didn’t even have to pay him upfront to develop it?
Andrew: He does the developing and the design?
Andrew: This is a really beautiful site, well done.
Jordan: It works really well.
Andrew: Does it work with just 1 shopping cart or with all of them?
Jordan: It works with a bunch as long as you can add Java Script to your check out pages, also known as Notshopify[SP], then it works. It works well except for the email in the field and all these other things. And there are a bunch of competitors in the market, which I think is a healthy thing and we’ve had a lot of people come to us from competitors and say, “It just doesn’t work with PayPal, it doesn’t do this,” so he really just did an amazing job. He basically took like two months off before he got the job at Onke and just put his head down and built it and now I think it’s going to work out really well for him. He has an asset that he maintains you know maybe once every two months or so he puts a bunch of hours in to add new features. I was in Germany in a co-working space and just designing and thinking through the process and why and how it should work. It’s a little complicated.
Andrew: I’m searching online right now to see which shopping carts it works with. I guess you guys don’t have a page that does that.
Jordan: Yeah, we’re doing a little facelift to the marketing site now. It works with Volution and Magento, and a few like Woolcommerce [SP]. We’ve had a lot of success in small closed-off e-commerce platforms that people don’t build things for, and we’re willing to do it and because of that we’re the only brand of cart app that works for their customers so they’re very happy about it. Yeah we’re just hustling baby.
Andrew: That’s impressive. Alright, you know what, I should say to people who want to follow up on this interview, we talked earlier about the Dane Maxwell course on copywriting. It’s one of the original courses that I had here on Mixergy. Jordan you’re nodding. What were you thinking as I was saying that?
Jordan: I’m a Mixergy Premium member and I have been for a long time and it’s difficult to articulate what it means to my business and to my career in general, but let’s just go through it. So Dane Maxwell’s course on copywriting. If you look at carhook.com it pretty much follows that course. Not kidding at all. Lewis Howes and his course on webinars. I just did a webinar last month. It was my first ever webinar. I used that course from Lewis Howes to figure out how to do it and how to sell and it was successful and I made like 2000 bucks selling my first course, my first info product using webinars. James Kennedy, Piehole TV [SP], and his course on using the phones. That in combination with Brian Croitsburgers [SP] cold emailing, that’s how I got my first 20 paying customers, with Carthook.
Jordan: Just cold emailed, got them on the phone. It’s very, very relevant coming from my situation. I went to the University of Michigan. That taught me nothing. It was a great school and a great experience, but it taught me nothing for entrepreneurship. And your show does that in such a relevant way and there are so many interviews that there are so many things that whatever situation you’re in, that’s relevant to your situation right then, I go to Mixergy and I look it up and then I get into it and then it’s like my starting point.
Andrew: That’s been my goal with Mixergy Premium to bring on people who do something especially well that other entrepreneurs need to learn from and have them teach that. I actually saw you on Cast M [SP] where you were interviewed and you talked about these courses, specifically the one about calling customers and . . .
Andrew: Thank you for saying it there in addition to now saying it here to the Mixergy audience.
Jordan: Yeah, just honest.
Andrew: If you’re not a part of Mixergy Premium, join right now by just going to mixergypremium.com. I guarantee you’ll love it or free shipping both ways!
Jordan: You got it. Conversion rates will go up.
Andrew: That probably won’t really work in digital. There is no shipping, but I guarantee you’ll love it, still holds true. Go to mixergypremium.com. Alright and what I need to learn from you is web design. Your site just looks beautiful. I think we should send people to carthook.com so they can check out the software, but you also have a personal site. Where can people connect with you on a personal level?
Jordan: Yeah, jordangal.com will be launched in a few weeks.
Andrew: By the time this interview is up, it’ll be up.
Jordan: Yes. I’m just getting into the whole audience thing so I joined my friend Brian as a co-host full-time of Bootstrap Web [SP] the podcast and I’m just starting to get into the whole information product and content thing because software is great but it’s slow. In reality, family, wife, two kids, you know, I like nice things. You have to make a lot of money to keep that going and while Carthook the software is longer term, these information products I think are a great way to supplement people until their business starts to take off. Or on Twitter @jordangal, or just email me.
Andrew: [??] when it comes to selling software, it seems like information is a good way of bringing in potential customers. I was just looking at my notes here. Yesterday I was talking with Nathan Barry [SP] who does exactly that. He creates content online and that’s what brings people in to his site and allows them to buy his software. So, I’m hoping that it will help in both ways. Both quick revenue today and also customers tomorrow. All right, we have a bunch of different ways to connect with you. It’s been so great to have you on. I’ve been looking forward to this interview for a long time.
Jordan: Me too.
Andrew: I think before the interview even started, you talked with Jeremy Weisz during the pre-interview and he asked you, “What do you want out of this?” and you said “I would like to deliver as much value as guys like Louis Howes, as much value as Dane Maxwell.” And boy, have you done it. You didn’t just tell an inspiring success story, you also gave us specifics. What you did to change your conversion rate. What you did to bring in more customers. How you sold your company specifically. Thanks so much for doing that. Thanks for being on here. Thank you all for being a part of it. If you got anything of value, I always say this, I encourage it because I’ve seen the power of it. If you got anything of value, find a way to say thank you to Jordan and he’s given you a bunch of different ways of connecting with him. Such a simple thing to do, but it goes a long way and I’m going to do it right now. Jordan, thank you so much for doing this interview.
Jordan: Thank you very much, Andrew. Thank you for having me. It’s a real career bucket list moment. Thank you.
Andrew: Cool. And thank you all for being a part of it.
Jordan: Bye guys.