Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com. It is home of the ambitious upstart. It’s the place where I’ve interviewed entrepreneurs about how they’ve built their businesses.
We’ve got everyone from the founders of Airbnb, founders of Wikipedia, founders of Y Combinator, so many other companies–that’s the goal here, to interview them, to understand what they’ve done so that anyone who’s listening to me can learn from them, build a successful company themselves and then my goal is for you to come on here and do an interview yourselves, tell me what you’ve done and teach my audience.
I’ve got an interview here that I’m going to be honest with you, my audience, I’m going to be honest with you, my guest–I can’t really wrap my head around it. There’s so much over here. I’m not sure what to make of it. Here’s the way that my team put it together here. I ask everyone on my team when they suggest a guest to also suggest a headline so that I have a sense of where we’re going with this.
So here’s the headline they out together for this one, “How Kosta Gara Survived an Iranian Prison at Age 13 and Became a Multimillionaire by 33.” That’s it. Kosta, that’s all I’m going to leave the audience with because I want to ask you questions about how you did it too and what those businesses are.
But first, let me say my sponsors for this interview are HostGator and Acuity Scheduling. I’ll tell everyone more about those later.
Kosta, first of all, how did I do with your name?
Kosta: Very well.
Andrew: Yeah. All right.
Kosta: Thanks for the kind words. I appreciate that.
Andrew: I was going to ask you what business are you running because I’ve got Vionic. I’ve got bHIP. What is it? What’s the one business that got you to this multimillion dollar status?
Kosta: First and foremost, thank you so much, Andrew, for having me on your show. I am flattered and honored that you gave me this opportunity to share a bit of my humble story with your audience. It’s been a journey, Andrew, for me over the last 30 plus years from age 12 when I’ll share a little later to where I am today, almost turning 44 on Saturday.
Andrew: Okay.
Kosta: So, a week short of 44. But the company that has really got me to that level of success is a company called bHIP Global, which is an energy drink company based out of Dallas.
Andrew: You sell energy drinks?
Kosta: I do.
Andrew: Among other things–you also have a cosmetic company, you also have a social media company, right?
Kosta: Yeah. We also own a production, consulting firm and a publishing company.
Andrew: And the way you do it is multi-level marketing. You’re the top guy in the multi-level marketing, the guy who created the business. Am I right?
Kosta: Correct, just two of them. The other four are traditional, including software publishing. So, four are in traditional world, two of them are interactive.
Andrew: What’s the software company?
Kosta: I’m glad you asked. Vionic is basically think of a Groupon for Facebook. We’re one of the first to come up with sort of an online platform empowering small businesses to run their own daily deals promotion, sweepstakes and deals using our platform right on Facebook. We have over 10,000 clients already worldwide.
Andrew: 10,000 clients? What’s the revenue of that business in 2015, let’s be honest?
Kosta: It’s a decent size revenue.
Andrew: Give me a ballpark. Are we talking $1 million, $5 million?
Kosta: Sub-$1 million.
Andrew: Sub-$1 million. The real killer, the real big thing in your business is the multi-level marketing business, am I right?
Kosta: Correct.
Andrew: Correct.
Kosta: We did $70 million last year.
Andrew: Okay. Vionic is that social media company. Wait, what was the number of the other business?
Kosta: $70 million.
Andrew: $70 million to you?
Kosta: $70 million in revenue last year.
Andrew: For you and then you split some of that with the down lines?
Kosta: Yes. That’s $70 million revenue for the company.
Andrew: For the company as a whole?
Kosta: Yeah.
Andrew: That’s pretty impressive.
Kosta: Thank you.
Andrew: Yeah. Ordinarily when somebody tells me, “I’m a multimillionaire,” I’m a little hesitant to interview them because I don’t know a lot of millionaires who walk around saying they’re multimillionaires. If anything, they’re very understated about it. But then when I saw that what you do is multi-level marketing, I realized you have to project confidence and success so that they understand where they can go, am I right?
Kosta: Correct. But I have been doing this for 20+ years, Andrew.
Andrew: All right.
Kosta: So, it wasn’t an overnight success. It was a seven-year overnight success.
Andrew: In the making.
Kosta: Yeah.
Andrew: By the way, I’m looking over your shoulder. I can’t help–first of all, I like how comfortable you are. That’s why I’m so comfortable in this interview saying what I’m feeling throughout. But you have actual rolodexes, two of them, behind you.
Kosta: Actually five of them.
Andrew: Five of them? What’s the deal with that? I see four on camera–no, I do see all five now.
Kosta: It’s probably over 4,000 contacts, which to me in this world we live in today, to me that is the inventory.
Andrew: Why paper though instead of–your phone could do this now.
Kosta: Because I’m 44. When I started, Andrew, collecting business cards, there were no phones. There were no scanners.
Andrew: So, you just put it all in the rolodex. What’s your system for keeping that organized and actually knowing what’s in there?
Kosta: We have a couple of employees in the company that every time I have a business card, they collect them and they scan them, put them into my database and we just add them to, you know, my corporate database. So, that’s how I keep track and put them on my iPhone. But I keep them and you know, I guess it’s collecting them. I don’t know.
Andrew: Okay.
Kosta: It should feel good to know I know that many people.
Andrew: I get it. Let’s take it to a tougher conversation.
Kosta: Sounds good.
Andrew: You were born 1979.
Kosta: In ’72.
Andrew: ’72. Oh, I see. I had the date wrong. That makes sense then why you would be 40+ years old.
Kosta: I would be 37 years old now.
Andrew: Right. Of course. There was a revolution though in ’79.
Kosta: Correct.
Andrew: And as a result of that, what happened to you?
Kosta: Well, my dad was a general in the military and he was working for the government and when the regime obviously changed, as most people know what happened in ’79, my dad was arrested just for reason of working for the wrong–
Andrew: The wrong side. What happened was the Shah was in charge, then the Ayatollah Khomeini came back into the country and took over and there was the revolution that happened over there. By the way, you told me before we started, I said, “Am I pronouncing your name right, Kosta?” you said yes and you said it was short for what?
Kosta: Kostantinos.
Andrew: Kostantinos. What is a guy with a Greek name doing in Iran?
Kosta: Well, let me tell you the story.
Andrew: Okay. Hit me, yes. I’m interrupting.
Kosta: No problem. So, yeah, in ’79, my dad was in prison for four years and as I said, working for the previous regime, like you mentioned perfectly. So, my dad was released shortly after four years and he passed away a couple months after that due to the excessive torture that he endured while he was in prison.
At that point, me being the only son in the family to sort of maintain the last name and regenerate and grow the family, my mom decided to sort of smuggle, if you will, out of the country, just like how you see people smuggled into the United States from different countries, I was smuggled from Iran to Turkey. My mom sold everything we had, Andrew, everything you can imagine.
We raised a little bit of money from family and gave me to a smuggler and I was 12, turning 13 very quickly shortly and my mom handed me over to a smuggler, unfortunately a wrong smuggler and not as knowledgeable. I got caught in Turkey after six days going to the mountains and the pain I endured through the trip at a very young age–Andrew, I’m only 5’8,” so I’m not a tall, big guy. Imagine when I was 12.
I was skinny, probably 65 pounds, tiny guy, and I had to walk about 36 hours through the mountain and 20-some hours on a horse just to get to cross the border. When you see people today here in San Diego cross the border from Mexico to San Diego, it’s literally 30 minutes and you’re in America. For me, it was a six, seven-day trip.
Andrew: I get it.
Kosta: So, I cross the border and I get caught, unfortunately. I was with 12 other individuals. We get caught. We went to prison in Turkey.
Andrew: Why was Turkey sending people back, by the way?
Kosta: Very good question, Andrew. At that time, Iranian government was sort of compensating Turkish government $5,000 per head. For every person they deported, the Iranian government was compensating them $5,000. So, 13 of us–and we were not the only ones.
When I finally went to back to Iran and I was in a maximum security prison, there were hundreds and hundreds of young individuals, anywhere from 15 to 16-year olds to 30, 40, 50. So, ended up being in a maximum security prison for almost six months, getting tortured because they wanted to reveal the name.
Andrew: Reveal the name of what?
Kosta: Of the smuggler.
Andrew: Of the smuggler, the guy who didn’t do such a good job. Why did you hold on to his name so much?
Kosta: I wanted to give up, to be honest. But my uncle said to me before he handed me over to the smuggler. He said, “If you ever get caught, do not mention his name because we might be able to use him again.”
Andrew: I see. So, by telling on him, you’d lock your family back in Iran.
Kosta: Correct.
Andrew: So, what kind of torture were you put under?
Kosta: This was about not even two weeks into my prison time, they were trying to get the name out of me. So, it was a good cop, bad cop. I was alone in a little cell and was sort of lashed 32 times almost on my back.
Andrew: Lashed?
Kosta: Yeah. It was very, very tough at that time. I couldn’t sleep on my back for almost five days, Andrew, five or six days, very painful. I listened to my uncle at that time. I didn’t know any better. If I knew better, if I knew what I know today, but I decided not to give up and finally they sent me to the maximum security prison and I was there for six months.
Andrew: Six months in there.
Kosta: Actually, at 13, Andrew, I spent a week in solitary confinement on my 13th birthday.
Andrew: And you member what went on in your head in solitary confinement?
Kosta: Those are some of the dark moments in my life because at that time nobody knew where I was, nobody in my family. Those countries, they don’t really have a record keeping system to track–there are no losses. There’s no system. So, I was simply imprisoned indefinitely. There was no time given. It was not a time I had to do. I was there for good. I was very lucky that my family found me finally and my grandfather actually put his house as collateral to get me released because otherwise I would be there god knows for how long.
Andrew: And then collateral under what condition? What would allow the government to take his house?
Kosta: Basically if I. . .
Andrew: If you left again.
Kosta: Yeah.
Andrew: And you did leave again.
Kosta: I did. But by then the guard and the revolution had eased off on that kind of stuff, so they were more easy and they released the house to my grandfather, eventually.
Andrew: And you got out again. There was an almost or a near rape in prison, you said?
Kosta: Yeah. Roughly, that’s why I was in solitary confinement because one of the guards had taken interest to me, an older guy. I was young. I was almost 13. I didn’t know anything. I felt uncomfortable. He was trying to tuck me in bed at night. We’re in the juvenile section of the prison. I started realizing this is going in the wrong path. So, I stopped and I rejected him and he decided to put me in the solitary confinement and I was screaming and it was very uncomfortable. I did everything I could not to go, but obviously I didn’t have any power.
Andrew: So, again, what were Greeks doing in Iran at the time?
Kosta: Well, actually, I’m Persian. I was born in Iran and that’s my story, where from Turkey I went to Greece. I grew up in Greece.
Andrew: But that doesn’t sound like a Persian name.
Kosta: I know. I have a middle name in Persian.
Andrew: I see. So your parents decided to give you like a Western name.
Kosta: Correct. When I was in Greece, Andrew, most people cannot pronounce my first name, it’s Kasra. So, when I was playing basketball on the street with Greek guys, they could not pronounce my name. I always end up leaving on the wrong team or not being able to play with them, so I sort of inherited the name Kosta.
Andrew: Ah, it wasn’t your–like me with Andrew. I made up Andrew. Got it. I see. So, then you get to the US and at 22 you’re introduced to what I’m imagining is the multi-level marketing business through a supplement company, am I right?
Kosta: Yeah.
Andrew: And there’s some draw to that. Sorry. Go ahead.
Kosta: Third year in university is when I got introduced to the business.
Andrew: What was it that drew you into it?
Kosta: You know, actually I credit my mom, Andrew, because I had some allergies during those times in my life and my mom said, you know, son, there are two kids, they don’t even have a high school degree and they work out of their basement and they make $10,000 a month. At that time, I was making $7.85 an hour. I was working full-time, making less than $1,000 a month. These guys are making $10,000 a month. I could not even comprehend what that meant.
So, I said, “You know, mom, I have nothing to lose. I’ll go over and check it out.” I fell in love with the vision, with the concept. I had never, ever heard of network marketing up to that moment in my life. I didn’t even understand what it meant. I was one of those kids, Andrew, that I was told go to university, get a degree, get a wife, go get a career, build a life, have a couple of kids, buy a house and build your life like that. I could not think outside of the box until I sort of was introduced to that business.
Andrew: And when you were introduced, from what I understand, you sucked at it.
Kosta: Very bad.
Andrew: What did you do that was so bad?
Kosta: I tried to reinvent everything, Andrew. I was not good at it. First of all, I joined two years too late in that business. Timing is everything in that business model, just like real estate is location, location, with a business it’s all about timing. More importantly, I didn’t have the experience. I was very young. I was 22. I had no credibility. People could not even pronounce my name, let alone having any credibility trying to be promoting the products, recruiting or pitching the business concept. So, I was a big failure for a number of years.
Andrew: So, then you went on and you start a software company.
Kosta: Yeah. I decided, “Maybe network marketing is not for me. Maybe it’s not meant for me. I’m an immigrant. I don’t have credibility. My family is not from this part of the world.” Maybe I’m meant to go build–I would save a little bit of money, I would start a business and maybe that’s my future, that’s my path.
Andrew: Okay. What’s the software company? It seems like it’s Team in Motion?
Kosta: No. Prior to that, it was a software company that was basically we were developing JavaScript platforms for big companies such as Nortel, Cisco, decent-sized companies. We had about 30-40 employees, decent success, nothing big. But really didn’t get a chance to really give that business opportunity a time to build because shortly after, my marriage to my ex-wife, unfortunately 9/11 happened and you remember 9/11?
That’s almost 15 years ago coming up soon. That’s amazing how we forget about those moments. But during that time, people thought it was the end of the world almost. So, unfortunately that company went out of business because a lot of our clients had pulled out of Canada, where I grew up. We obviously were small, very small.
Andrew: This was in Canada you’re building this software company.
Kosta: We didn’t have enough funding. We didn’t have enough traction at that time. We were just trying to get the business going and getting sort of a momentum. Very quickly the company went out of business, unfortunately.
Andrew: And you took on personal debt from it?
Kosta: A quarter of a million dollars.
Andrew: What was it attached to? Was it like computer equipment that you’ve personally guaranteed? What was it?
Kosta: Remember those times, Andrew, that you had those big screen computers, giant-sized computer, photocopy machines? A lot of equipment we had purchased for the company were all purchased under my name. So, it was very difficult.
Andrew: And you can’t get away from that.
Kosta: I did not want to declare bankruptcy. I didn’t believe in it so I wanted to–I carried a debt and paid it off.
Andrew: How long did you carry it for?
Kosta: Two and a half years.
Andrew: That personal guarantee is something that we don’t even notice that we do. One of the pieces of advice that my dad me when I started in business, even before when I was in high school going to work for him, he said, “If you sign anything, put your title down so that you’re letting them know you’re not signing as an individual, you’re signing as the representative of this company.” So, if you’re like a CEO, say, “Andrew Warner, CEO,” or, “Andrew Warner, Managing Member,” whatever it is.
The other thing was he said, “Watch out for those personal guarantees,” like so many people run into trouble with that where you take it on. Frankly, I had a lot of personal guaranteed stuff. I bought computer equipment, I could have paid for it in cash. I had it in the bank, but the interest rate they gave me was just so great. I said, “Who cares? Let’s just do it.”
And then after I sold my company I did an asset sale. I still had the debt from these computers. I said, “All right, I’m going to negotiate it down.” Once the company is not there, it’s easier to negotiate. I imagine that this wasn’t a quarter-million that you had to pay fully.
Kosta: No. It was a lot more. We sort of negotiated that. Remember, as you know computers, you buy them for $2,000 and nine months later they’re worth $500.
Andrew: Right.
Kosta: But unfortunately you still owe the $2,000 if it’s leased equipment. So, it was very difficult for me. I did not want it to affect my credit. So, looking back, I wish your dad was giving me the same advice.
Andrew: I didn’t listen to it. Actually, I listened to it to some degree. Once the company is gone, your leverage is really increased. If you really wanted to be a little bit shady about it, you can move all the assets to another company and say, “This first company is gone. I know I personally guaranteed you, but the first company is gone. Let’s work it out,” and they’ll negotiate.
Kosta: You know, my challenge was–
Andrew: That’s actually not the thing I should be advising anyone to do but I’m just giving you an idea of how much leverage you have once the company is gone. Sorry.
Kosta: But for me, I had just gotten married. It was a new life for me. I was so busy with everything else. I did not want to have any negative in my life. I wanted to surround myself with positive stuff. I said, “I will find a way to pay this off as long as it’s put aside, I just make monthly payments and just focus on. . .”
Andrew: That’s when you got into the cosmetics business that was also multi-level marketing and that’s what helped you pay off the debt, right?
Kosta: Yeah. Literally from the day I joined that company, 18 months later I became a millionaire.
Andrew: From the day you joined or started it?
Kosta: I started it.
Andrew: You started it. Okay. Let me do a quick sponsorship message right now. Anyone who’s listening to me should understand–do you know about a company called HostGator? Okay. HostGator you do know, actually, but this is a sponsorship message, I’m wrong, for Acuity Scheduling. I got it wrong. Do you know Acuity Scheduling?
Kosta: No. I don’t.
Andrew: Okay. Here’s what Acuity Scheduling does. Imagine you wanted to call up people who you want to partner up with. You want to setup calls with–who’s a good partner for you? Here’s one. I want to get you to do Mixergy interviews. The problem with getting you to do Mixergy interviews is that I have to schedule tons of people all at the same time to do interviews with me. So, what I do is I use software.
The first software that I ever discovered to make it easy to book meetings with lots of people is a program called Acuity Scheduling. That’s the very first one that I discovered. The thing that I liked about Acuity Scheduling is I could connect it to my calendar so it knows when I’m busy and when I’m free.
Then I could go in and say, “Every Monday I want to record interviews at. . .” and then I would plugin the times. Every Wednesday I want to record interviews and I would plug in the time, etc. And then I would get a single link that I could email to people so I could say, “Hey, Bob, I want to interview you for Mixergy. Here’s why you should say yes and here’s a link to make it really easy for you to pick the time off my calendar.”
Bob clicks the link, sees my calendar, can pick the exact time that he wants to have a conversation with me from my calendar. Once he does that, he gives me his name, his email address, his phone number, his Skype name, I always ask for that. Boom, he’s on my calendar. I’m on his calendar. It’s good to go.
I’ve experimented with other companies since then and I think there are many that are really good. The problem with all of them is that I get really into using every piece of technology and I could figure it out very quickly. My people on my team don’t have the patience and the love for gadgets and software that I do. Every other one that we’ve tried–and we’ve been trying others–is so frustrating that everyone else on the team brings it back to me and says, “Andrew, you wanted me to make a chance. I can’t do it. Can you do it?”
The thing about Acuity Scheduling is they make it so easy everyone on my team can use it. So, if you’re growing your company, with Acuity Scheduling, other people on the team can manage it.
Kosta: This is very interesting. What’s the URL for this company?
Andrew: I like that you’re asking that. It’s AcuityScheduling.com/Mixergy. I’m attaching that /Mixergy at the end because I want credit for sending people over to them, but also if you go to AcuityScheduling.com/Mixergy, you’re going to get 45 days free to try it out. Frankly, for many people who are starting out a business, in 45 days they’ll get all their customers, 45 days, they’ll get all their customers, 45 days, they’ll see the full value and they can cancel and walk away and Acuity won’t get a penny from them. But my sense is that for many more people, it’s actually going to be the thing that becomes an integral part of their workflow.
Go to AcuityScheduling.com/Mixergy. I talk way too much about some of these sponsors. This should have been a two-minute or one-minute commercial.
Kosta: Let me tell you why it’s interesting. I just turned around and looked at my assistant sitting in front of me. She’s already looking for this company.
Andrew: I see. Is that Katie?
Kosta: Yeah. She’s already pulling it up.
Andrew: Katie, thank you so much for making this interview happen. She’s been helping out. I accidentally called Katie earlier when I meant to call Katherine, my past interviewee. She was confused, Katie was confused, I was confused.
Okay. The cosmetic thing–you’re a guy who didn’t do well in multi-level marketing and you say, “I’m going to start my own MLM?”
Kosta: Yeah. So, in 2001 I became a part of a company that was already in existence.
Andrew: Okay.
Kosta: I would sort of lead their Canadian division.
Andrew: As an employee or as their first rep?
Kosta: As a distributor.
Andrew: A distributor means that–does someone bring you in?
Kosta: Uh-huh.
Andrew: Multi-level marketing works like this–I’m selling cosmetics, I get a cut of the cosmetics, but if I bring you in, I get a cut of the cosmetics that you sell in addition to a cut of my own cosmetics, right?
Kosta: Everybody I could potentially bring in.
Andrew: Right. So, someone brought you in and said, “Why don’t you become the Canadian guy for us and you can bring everyone in Canada together.
Kosta: I was very driven, Andrew. I had a $10,000 reason every morning to wake up. That’s how much I needed to pay off my bills.
Andrew: Okay.
Kosta: I was 29 years old and this guy said to me, “You need to meet the CEO of this company. He’s same age as you, but he’s a visionary and this company is going to go somewhere. They could potentially be the next billion-dollar deal and you want to align yourself.” His name is Richard Bendel. Actually, he’s a very good friend of mine still. He just reached out to me after 16 years just a couple weeks ago.
Andrew: Richard Bendel–what’s the name of the company?
Kosta: That company at that time was Lexus.
Andrew: Lexus, like the car?
Kosta: Just like the car except with two X’s.
Andrew: But Lexus made that up, didn’t they?
Kosta: They did.
Andrew: So, he decided, “I’m going to take the Lexus name and re-appropriate it?
Kosta: Let me tell you. When I joined this company, Andrew, I was 29, broke. This company does less than $1 million a month in sales. They’re very smalls. They have two lawsuits, one from Lexus Toyota because obviously infringement.
Andrew: Right.
Kosta: And it was a small lawsuit, about $300 million.
Andrew: Okay.
Kosta: And the second lawsuit was with Pfizer, believe it or not. Do you know Pfizer?
Andrew: Yeah. I know Pfizer, of course.
Kosta: One of their main famous products called Viagra, this company had a product that was a female version of Viagra called Viacream.
Andrew: Okay. So, they’re selling Viacream as Lexus.
Kosta: So, a lawsuit from a $60 billion from Pfizer, a lawsuit from Toyota, the largest automaker in the world. This company is $1 million a month, tiny little company. My friend says, “You’ve got to join this company. They’re going to go somewhere.” I’m looking at Richard going, “Richard, this is crazy. I cannot afford screwing up. I just got married. I’ve got a family. I cannot afford it. Do you feel like this is the right deal?” He said, “Yeah, you need to meet the CEO.”
I flew to Dallas, from Canada to Dallas to meet this guy. I sat in a coffee shop. Andrew, I come from the corporate world. So, I showed up in suit and tie, dressed up and I show up to Starbucks and I look at the CEO. He has a hat on just like me and a Nike $10 t-shirt and ripped jeans and sandals. He introduces himself as a CEO. I almost fell of the chair. I’m like, “You’re the CEO of this company?” But 30 minutes into the conversation, I fell in love with his vision.
Andrew: What was his vision?
Kosta: He said he was telling me what he had in mind, what he wanted to do. He wanted to create 100 millionaires. He wanted to grow a company to a $1 billion level and he wanted to help 1 million people do this business full time. For me, those were big words. That’s not something everybody can accomplish. But for whatever reason–
Andrew: Because he was thinking so big. Can I tell you, though–I know that my listeners hearing the guy runs a company called Lexxus, he’s selling this Viacream that’s a female version of Viagra, that comes across as a very shady person that you might want to stay away from.
Kosta: Totally.
Andrew: None of that turned you off because he has a big dream and you are a big dreamer at that point too?
Kosta: For me, on a serious note, he was so sincere. He had a big heart. I fell in love with his heart with what he had in mind. Here we are 17 years later, we’re best friends now and we own the companies together. But back then I didn’t know him. I barely knew his last name. But I decided maybe it was just for me, Andrew, at the right time in my life. Timing is everything in life. For me it was the right time and right place.
I looked into his eyes and said, “Terry, I’ll give you two years.” I will put the blinders on. I will not look at anything else. I’m going to do this. I’m going to eat it, walk it, talk it, dream it. That’s all I’m going to do for two years. He said, “Okay. I’ll give you the support.” I went to work and it was not easy. Here I am, our company has going bankrupt, I’m 29, not a lot of credibility. Everybody I talk to, they tell me, “Go get a real job while you’re young, while you have a family to support.” I didn’t want to listen to any of them.
So, I spoke to 300 individuals. I showed the business to 300 people in the first year and 289 rejected to even take one step farther.
Andrew: 300 people. When you say you showed the business, you just needed them to pay a few bucks to get in?
Kosta: Not even that, just to look at the business and look at if this is something for them.
Andrew: And they wouldn’t even consider it?
Kosta: Not even. 289 said, “Go get a job. Get a life.”
Andrew: Why not?
Kosta: I don’t know. I guess maybe I didn’t have credibility at that point. Eleven of them said, “You know what, Kosta, I’ll join. I’ll do the business, but I’m not giving you full time. I’m just going to commit a few hours a week.” Of those eleven, five of them we decided to build this full-time together and those five took me and my entire company to $90 million in less than two years in sales.
Andrew: What did you do to get all those customers? I call them customers, but really they’re downline.
Kosta: They’re distributors/customers.
Andrew: What did you do to get them?
Kosta: Nonstop, Andrew. I was just consistent, seven days a week. I always tell people, people ask me, “How did you become a millionaire?” I tell them it takes effort. It takes commitment. But more important, it’s your sort of internal commitment to life to what you want.
Andrew: I get that. Let’s be more specific. I’ll be honest with you. The more we’re talking about this, the more I like you, but I’m also more skeptical about the whole thing. I’m going, “Why am I doing an interview with a guy who created a multi-level marketing business when I’m doing software-based companies here?” I don’t even know how to vet you. I don’t know how I can tell whether all this stuff is true or not, but I do know can I get something useful out of this interview. So, let’s be more specific. What did you do that got people to sign up with you? What did you do convince them to come on board?
Kosta: Well, it wasn’t as much convincing, Andrew, as it was for me, really, I was committed. So, I setup a goal with my wife at that time to commit to this seven days a week. So, we cut down family gatherings, weddings, anything I could.
Andrew: What would you do with the time you got? Do you start making phone calls to strangers?
Kosta: Eight to ten hours a day on the phone.
Andrew: Calling people just randomly?
Kosta: Well, for example, I would call you up, “Andrew, I came across this opportunity. I just need five minutes of your time,” and if you were not interested, before I hang up, I would get two referrals from you, “Just give me two names you know. Maybe it’s not for you, Andrew, but do you know someone who would be interested that would give me five to ten minutes.”
Andrew: I see. And if I gave you a name of a person, then that’s a much warmer conversation than you might have had before. I okay. What else did you do?
Kosta: So, that was one of the things. The second thing I did, I did a lot of commuting back and forth to different cities, surrounding cities in my town, which I lived at that point in Ottawa. So, I traveled quite a bit to Toronto and Montreal. It’s like living in San Francisco going to San Jose and other cities around.
So, I commuted quite a bit and I met a lot of people in person. This to me still, I believe, this is sort of a belly to belly, eyeball to eyeball type of business. I wanted people to meet me to see I’m real. This is a real opportunity, a real business. I think that helped me a lot with that credibility part of it.
Andrew: Because they would see you in person.
Kosta: Correct.
Andrew: How would you get all those people to see you in person?
Kosta: Through the same warm market. Andrew, I’m coming to San Francisco, I know this is not for you. But I know you’ve got your neighbors and friends that might be interested wanting to make some extra money. If you refer me to them and if they’re interested, I’ll send you a $100 gift card for a restaurant in your town.
Andrew: Say that again? I see, if my friend who I recommend is interested, then you’re going to give–I see, then you’re going to give me a gift card to a restaurant.
Kosta: Yeah.
Andrew: Got it. Okay. What else? I see here I’m Googling you as you’re talking. I didn’t realize you wrote a book called “Organic Networker.”
Kosta: It just become an Amazon bestseller last month.
Andrew: I had no idea. Why didn’t my researchers not tell me about that?
Kosta: I’ve co-authored two books. Have you heard of guerilla marketing?
Andrew: Guerilla marketing of course.
Kosta: I coauthored that book, sold 15 million copies, called “Guerilla Multi-Level Marketing” and the second one was called “Build it Big.” I coauthored that with a very dear friend of mine. That also became Amazon’s bestseller. This one, “Organic Networker,” I wrote the entire book and this became Amazon’s bestseller last month. This is my fourth book coming out Christmas. Called “Six Sugar Cubes.” It’s basically my life journey, sort of a memoir of my life.
Andrew: Okay.
Kosta: Believe it or not, I was like you. I remember the first time somebody said to me, “You can make $10,000 a month,” I was as skeptical, you can imagine. I could not believe it. I grew up in a world that you’ve got to work. You’ve got to have a job. You’ve got to build a company to do that.
Andrew: It’s not so much that I’m skeptical about that. It’s that I’m skeptical–I’ll be open with you–about the whole multi-level marketing thing, that it really feels like a business that churns through people by raising their hopes, getting them to bring on, let’s face it, like two or three of their closest friends, but then they give up and move on and you’ve got three of them. Then eventually some of those people become the sharks who bring in a lot more people. But for the most part, most people kind of burn through their friends with it.
Kosta: Totally. I agree. Unfortunately that’s part of that that has given the industry a bad name over the last two decades. But the company that I became millionaire, it was a publicly traded company on NASDAQ. Their stocks actually went from a penny share over the counter on NASDAQ to $25.35 on NASDAQ and they’ve done over $1 billion in sales now.
Andrew: That’s the company you launched?
Kosta: The company I was part of.
Andrew: That’s the company you were part of. I’ll be honest, I’m also skeptical of companies that are trading at a penny. Penny means that they did a reverse merger to go public, right? That’s why they’re penny. Why do people do a reverse merger when it means you don’t actually get cash when you go public, right? The whole idea of going public is to cash out a little bit.
The reason people do reverse mergers is because they don’t want the scrutiny of going public, but they do want the shares that they can use, right? How does the tock go from one penny to so many dollars? It’s because it’s easy to pump up those stocks because there are very few outstanding shares. That whole thing is. . .
Kosta: Correct.
Andrew: All I’m bringing up, by the way, is outside skepticism. I don’t think it’s actually helpful to bring into an interview because nobody’s listening to this interview to hear my skeptics. I might sound brilliant for being so cynical, but that’s not who I am and who I want to be. I want to pick out some ideas that are useful.
Frankly, if what you do is multi-level marketing, I’m totally okay with that. I’m okay with anything. What I’m not okay is me as an interviewer not getting enough that my audience can use it in their business. That’s where I feel like I failed. The rest of this stuff, you can do all day. You can create female Viagra creams all day long and I’m excited to interview you if I can do a good job. So, I like the dedication you brought in. tell me more. What else did you bring in that allowed you to get so many people into your downline?
Kosta: I think with me it was more of stepping up as a leader and leading by example. Unfortunately, one of the downsides to the industry, when people become successful, they forget how they got there and they often unfortunately focus on retiring and enjoying life. So, I had become a millionaire in 2003 at age 31, but I worked the next two years committing to helping those people that got me to where I was. That’s probably one of the things that helped me empower me to be successful.
Andrew: What would you do for them to help them be successful?
Kosta: Commitment, just being there for me when they needed me, training them, mentoring them, guiding them. One of the things I love about this profession, what I call network marketing, it’s you go out of your way to share all your knowledge and expertise with people you bring into the business. Let me give an example.
Andrew: Okay.
Kosta: I own a software company. I have got a few employees in the company. I don’t share all my secrets with them because if I do, they can probably go across the street, open a similar company and compete with me. So, I often hide quite a bit of my expertise and knowledge because I don’t want to create competition, where in network marketing, it’s completely different, Andrew. You go out of your way to share as much as you can of your knowledge and everything you’ve acquired in terms of experience with them because the more success they have, the more success you will have.
Andrew: All right. Let me talk about my second sponsor. It’s a company called HostGator. If you guys want to setup a website, HostGator is not only the easiest way to set it up and own your domain and own the software that’s on there. They’re now making it really super cheap. All you have to do is go to HostGator.com/Mixergy and they’re going to give you 50% off, HostGator.com/Mixergy.
Speaking of being open, I’m looking here at Legal.com. It says that Amway sued you guys for taking some of their ideas, for interfering with some of their distributors. Let’s be open. What happened there?
Kosta: Actually I talked about this with–
Andrew: Our producer?
Kosta: Yeah, the producer, very interesting. It was a David vs. Goliath sort of a case and it made news everywhere. Here’s Amway, a $10 billion company suing us. We were a $70 million a year company, so a David vs. Goliath concept. They were suing us because I recruited one of their top distributors in Canada. The lawsuit took about two and a half years, went to a federal court. We were in Federal court for seven days in the Texas federal court in front of eight jurors. After six or seven days, Andrew, we won all seven charges against Amway.
Andrew: Because you hired their person, that’s the only thing you did? Did you start using some of their techniques? Did you start doing anything like that?
Kosta: Of course not. Their technique is very outdated.
Andrew: Really? What stinks about their technique?
Kosta: I don’t think Gmail uses anything to do with Hotmail, correct?
Andrew: I see. Okay. So, what are your techniques that are more advanced than theirs?
Kosta: More about tools I truly utilize. I’m a high tech guy. I own a software company. So, I’m really big into tools, Andrew. I try to empower people all the time with sort of delegating everything and utilizing tools, you name it, from Evernote to things you and I use on a regular basis, I’m a huge fan and an advocate.
Andrew: Can you be more specific?
Kosta: So, one of the things I did during those times, I wanted to make sure people have the ability to reach a broader audience without leaving home. So, this is in the late 90s and early 2000s where I started using video conferencing and conference lines. Not many people were using it and I started doing recorded calls, recorded trainings and I would put up videos on YouTube and have people watch recorded stuff versus constantly wanting to come see me. There are only so many hours in a way.
Andrew: I see, which is what you’re saying Amway was doing. There was a lot of in person stuff. They also built that website I remember a while back. They were supposed to give you your own URL on their site and that was outdated as soon as it came out. But that lawsuit actually says that Casey Comden gained access to Amway’s distributor database and thereafter improperly solicited other distributors.
It wasn’t just that you recruited him it’s that he got the database of Amway distributors and then brought them to you guys, brought them to Team in Motion, which is one of your company names, and to you.
Kosta: Correct. Actually, Casey was one of the Amway people. But in this business, both Terry and I are true believers that we don’t own people. We as company owners don’t own people. Nobody owns anybody. We believe you’re a volunteer army, that you join a business, you are voluntarily joining a company. You have the rights to do what you do. There’s no difference, if you work for Facebook today, tomorrow Google can hire you and work for Google.
Andrew: Totally. But if Facebook got Google’s directory from one of Google’s employees, they’re going to come after that Google employee. They’re going to crush them. And they should, right? It’s not like taking sushi home for lunch and the Google offices. I like it. I feel like what you guys are doing is you’re hustling. You’re being competitive. You’re seeing that your competitor is somebody who potentially could work with you and you’re going after them.
Kosta: Yes, we did at that time. Absolutely.
Andrew: Maybe you pushed the envelope, but that’s what the little guy does.
Kosta: Perhaps.
Andrew: So, teach me something. Teach me about how you’ve done sales. Let me walk away from this feeling like I’ve gotten something I can use in my software business or other people who are listening. I don’t have a software business. I’ve got this Mixergy. But if someone is listening to me with their software business, what could they take away? What could they use?
Kosta: I shared this with your producer.
Andrew: Yeah, hit me.
Kosta: I sort of took this idea also to my software company, to all my companies, what I learned over the last 20 years this is something I always share when I do keynote speaking for companies. Most often than not, most of us out there, Andrew, focus on perfecting everything we have before we go public, before we go to market.
As a matter of fact, I was at a networking event last night with a guy who’s a software programmer and he’s looking at doing something on his own and bringing it to market. He’s been sitting on it for 18 months and he still hasn’t taken it to the market. I asked him, “Jeff, why haven’t you taken this to market?” “Well, we’re testing it with 1,000 people for the last 12 months. We want to make sure it’s perfect. The UI looks good. The colors are the perfect colors.”
To me, it does not represent the model that I’m used to, which is what I call the MVP. To create something quickly, take it to market, and let the market dictate what direction you should take the product.
Andrew: Okay.
Kosta: In my first company, the reason, Andrew, why I failed–and I share this all the time with everyone–because rather than me picking up the phone and making phone calls, I wanted to make sure my business card looks perfect and I wanted to buy the perfect phone that looks good and has all the buttons then I started working on a brochure because I thought, “I need a brochure. If I don’t have a brochure, I won’t have credibility.” So, I spent like a month on a brochure back and forth to making sure the damn brochure looks good.
Then after the brochures, then I said, “I’ve got to make sure I look good.” So, I went and bought nice clothes. Then I said I’ve got to have a nice car and you name it. I put a lot of focus on things that were not bringing revenue, that were not generating sales, that were not moving my company forward.
Why I succeeded in my second company was because I did none of those. I really jumped in. Before I had a business card, I was already making eight to ten hours a day calls for months. I forgot about all of that. When I started my software company, whether than bringing a product and sitting on it for two years making sure it’s perfect, we brought it in, 30 days later we’re in the market testing it immediately. We brought it back, updated it and the next version is released.
So, we worked through that. That really contributed to our success, rather than most people. So, one thing I can share with the audience on this call, which again, is human nature. We tend to often criticize ourselves and anything that is with us often more than anyone else. I learned very quickly Andrew that if you focus on what market needs and market wants, market will dictate the path you need to take to succeed and develop.
Andrew: How about for convincing people in selling them on one on one situations? What’s worked for you?
Kosta: Honesty and integrity for me has been a big deal. That’s probably why I have the name I do. There are thousands of links on my name and you’ll never find anything bad just because I’ve been very straight up with everyone. I don’t need to exaggerate. I’ve been really straight to the point of what has contributed to my success.
You don’t need to exaggerate what you’re promoting. It doesn’t matter if it’s a software company. It don’t matter if it’s a network marketer or a book publisher, irrelevant, if you stay true and have the integrity, most of the time I’ve found it helps me giving me the credibility I need.
Andrew: I’m going to be straight up with you here. I sucked at this interview. I feel like I haven’t gotten something unique and innovative here. I think we had really good rapport. I think I just hadn’t gotten into that, that if I would leave my idea that being honest is the way to do things, I think I’ve left them with stuff that it’s obvious. It’s not your fault. It always comes back to the interviewer. Frankly, as you’re talking, you’re right. I don’t see any links that have negative information about you. I’m looking at like bHIP BBB or I’m looking for stuff that shows what you’ve done.
It’s my fault. It always goes back to the interviewer. You’ve written books. I didn’t have the books and I didn’t read them in preparation for this. I think that could have helped. I think there is something about the way you sold as a guy that ran a networking marketing business that I couldn’t tap into what are some of those techniques we could use as sales people.
I think it was interesting to see you say if someone said no that your fallback was, “Give me two other people who you think I could be helping.” I think that’s interesting and potentially useful. But I didn’t take into other stuff. I accept. I can’t be 100% and you know what I’m not going to do.
I’m not burying my failures. I am not. I’m going to show this online. People can listen to it. I know at the end of this, they’re going to walk away saying, “Andrew, why did you publish? Why didn’t you just hide it?” I think it’s important to see when a conversation doesn’t work out for me. I think that’s important in a world where every podcaster pretends that he’s a Superman who never makes a mistake.
Kosta: Let me show [inaudible 00:50:36] partly has to do with what you mentioned. As well, the space I’ve been involved, it’s sort of a taboo for most people. It’s not in their everyday vocabulary, direct sales network marketing. Quite often, most people are burned by lack of knowledge or experience or bad referral. When you come across a legitimate guy like me who has built a lifetime residual income, it automatically takes you back to think about.
I share 230 pages here in this book of techniques. I do this, Andrew, because I could have turned this into a $5,000 program like a lot of my colleagues do. I have hundreds of thousands of followers around the world. I’m not talking Facebook followers. I’m talking real followers. Instead of doing that, I turned it into a book I sell for $15. I’m not trying to become successful for selling a book.
Andrew: I can see it’s $4.99 on Kindle here in the Amazon bookstore. That’s like your calling card.
Kosta: Correct. This is me more paying it forward, something I’m going to leave with you is I’m very fortunate that I had the opportunity to be in North America has given me. I’m very blessed. I count my blessings every day. Especially this industry gave me opportunity, an immigrant that didn’t even graduate from university had an opportunity to become multimillionaire because of this industry. This industry made me somebody to become who I am today. This is what I share with people.
Andrew: I get that. This meaning the book. Frankly, I’ll be honest with you, I have some of those prejudices about multi-level marketing. I think it’s important to acknowledge them. But with those prejudices, I still want to learn. Even if you said, “Hey, Andrew, I’m a crook. I’m Bernie Madoff.”
Frankly, I would say this if Bernie Madoff was available for an interview, I would interview him and my questions would not be about, “Why did you?” or, “How dare you.” It would be like, “What worked for you? How did you persuade people?” So, even though I have prejudices. I hide them. I’m open about them. I can set them aside to learn from someone.
My frustration is that I wasn’t able to pull out enough actionable, useful information from here. You’re right. You’ve got a book out there and I think we should talk about that. It’s “Organic Networker” for people who want to see what your networking process is. I accept. I like it. I like you as a person. I wish that actually I didn’t, that I could come up with some negative stuff that I could bring out the guns, at least that would shake things up or that I had more actionable stuff. I’m just going to leave it with I can’t win them all. You can’t win them all. We do what we can.
Kosta: I’ll leave you with something for your audience, Andrew.
Andrew: Hit me.
Kosta: Looking back for 20+ years, if I look at one of the key contributors to my success, I had the ability to put the blinders on and focus and zero in on the project. I’m one of those guys that cannot do five things at the same time. I excel at one thing. I’m not a multi-tasker. If you’re talking to me, I cannot be chewing gum. I lack that ability. I can do one thing at a time. I’m very good at it.
So, when I share with everybody when I do interviews, I tell people if you’re doing whatever it is, if you’re mowing lawns, that’s your business, if you own a grocery store, if you’re an attorney, focus on that. Put the blinders on.
Andrew: How does that square with what we started the interview with, where I asked you what you were doing and there were like five companies and I’m looking at your LinkedIn profile and I see bHIP Global and COE of Vionic and I see managing partner of Gara Griyo,
Kosta: Correct.
Andrew: How does that square with that?
Kosta: I have got management running all the companies.
Andrew: So, it’s not you running them on a day to day basis.
Kosta: I could not do that.
Andrew: So, when you do something, you focus in on it when you’re doing it day to day.
Kosta: Absolutely.
Andrew: All right. That is good advice, why don’t we it with that. If people want to see you, I know you’ve got your personal site. What’s the URL of that?
Kosta: KostaGara.com. I’m sure you have a link as well.
Andrew: We’ll absolutely have it. I think with that or maybe we’ll link to Vionic, which is a software company for social media automation. I’m curious to see what you guys think. You can email me. You can post your comments. You can let me know. I’m totally accessible. Frankly, if you’re listening to this and you’re ever in San Francisco, you’re all welcome to come to my office at 201 Mission Street, see where we record Mixergy and we’ll talk in person over a drink of scotch or coffee.
Kosta: I can’t wait to see you in person, Andrew, and we should have a lunch together.
Andrew: I would love it. I’ll take you to a good place in San Francisco or if I’m ever in San Diego.
Kosta: Please do. Hopefully I’ll convince you to move down here.
Andrew: I think you could because you’re a good salesman, but I’m pretty happy here in San Francisco. Thank you so much for doing this. Thank you all for being a part of it. Thank you to my two sponsors, HostGator.com/Mixergy and AcuitySheduling.com/Mixergy. Bye, everyone.
