Andrew: Hey, everyone, my name is Andrew Warner, I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses and I was at an event recently called such a weird name that for a long time I resisted going to the event, but it’s called Baby Bathwater. And the thing that I discovered about Baby Bathwater is there all these incredible entrepreneurs who are doing things that most people don’t realize. They’re a big business, well organized, and they’re doing well. And what they do is they all get together and kind of hang out, not to listen to a bunch of presentations, though there are presentations and talks, but to just kind of hang out, ski together, talk. I love the people who are over there, but I didn’t want to be the person who was walking around going, “I should interview you. Do you want to be interviewed on Mixergy?”
So I reached out to the founders of a Baby Bathwater and I said, “Can you help me interview some of these people?” And I know some of them don’t want it to be known, but the ones that will be willing to do an interview, so I’m not a bit of a pushy interviewer. Can you help me meet them? And they did, and they said, the first person you’ve got to get to know is this guy, David Sinick. And he runs PaleoHacks and I looked him up and I said, “He’s not the founder though. You know we’re a founder-based site.” And I said, “Hang on a second, look him up, listen to the story.” And I go, “Wait a minute. We have to have him on the site,” because number one, PaleoHacks is doing really well. And number two, the way that he ended up controlling the company, I think is really interesting.
He’s someone who did a little bit of work for the site and said, “I want to buy it.” And we’ve done interviews with entrepreneurs, of course in the past, we’ve done interviews with intrapreneurs, which is basically people who run companies within bigger companies. But this idea of taking over a business and becoming almost like an entrepreneur in the way you reinvent it, I think is really interesting and frankly the whole PaleoHacks business model, I think is one we all need to look at. All right, so I get fast talking New Yorker style sometimes, you notice that, David?
David: I am from the Northeast Connecticut, so I’ll be right there with you and rapid-fire speech patterns for sure.
Andrew: Good. I’m so glad that my parents are patient and accepting of me because this the way I talk to them too. And then I say . . . I end the call with this old line from a talk show host, Bob Grant, where he used to say to his caller, “Get off my phone.” So I was on the call with my parents by saying, “Get off my phone and they’re okay with that too.”
David: That sounds accurate for the Northeast, for sure.
Andrew: Yeah, New Yorkers, man. All right, that David is David Sinick. He is the guy behind PaleoHacks, the world’s largest online Paleo community. We’re going to. Find out how he makes money with a Paleo community, how he took it over, what he’s doing with it different from the founder. And there’s so much more. This whole interview is sponsored by two great companies. The first will host your website right? It’s called HostGator. And I’ve got to tell you guys about this, how to sleep with your wife, dude, that I met at the conference and how that fits in with HostGator. You know who I’m talking about?
David: It sounds vaguely familiar. I’m happy to learn more.
Andrew: He was like my lodge mate at this place. And then the second sponsor will help you hire your next great developer. It’s called Toptal. David, welcome.
David: Thank you for having me. I’m super excited to be here. A little nervous as previously discussed.
Andrew: Yeah, You told me you had a little anxiety. About what? What is the anxiety about being here?
David: I’m taking you guys seriously. You’re the real deal. People actually watch this. I’ve made the mistake and you’ll find this if you Google my name, which I would encourage everybody here not to do of me coming on interviews. This was before I ever had a girlfriend to explain to me presenting yourself. But there’s an interview with me where I’m like literally in my pajamas with my hair all messed up, which is probably the case now [inaudible 00:03:26] possible to work with. But yeah, I’m not doing that anymore. I have recently made a stronger attempt to kind of come out from behind the scenes because that’s what I am classically. I’m very much a behind the scenes guy. So, hopefully that doesn’t come out.
Andrew: Why? What do you think it is about you that keeps you behind the scenes? Why aren’t you the guy, the face?
David: Man, I mean we can go back to like the way I was raised or middle school or something like that, but I think it’s just like I’m a big time introvert and I think a lot of that stems from . . . There’s all sorts. I mean, it gets crazy psychological stuff, but I think it’s just like I have a little bit of fear of bringing myself out into the public and this idea of me being a public figure and other people being able to draw conclusions about me as a person based on the tiny, tiny sample size.
And that freaks me out. At the same time I’m also a guy who like, tries not to care as much as possible, and I have this like weird conflicting cognitive dissonance dichotomy in my life where I do. I’m a human, so I do crave attention. I’m thrilled to be on this. Any reply get from anybody on this, that sees this and says, “Oh, I saw you at Mixergy” and be stoked about. At the same time, it’s very uncomfortable for me to put myself out there. I think probably has to do with being rejected by girls in high school or . . .
Andrew: Is that true?
David: Being rejected by girls in high school? Oh yeah.
Andrew: Do you also feel like, yeah, that’s a scarring situation. That also is a very big motivator, right? Like, I’m going to show the world. Do you feel that? I remember saying, I’m never going to be able to talk to these girls, but if I make enough money, they’re going to want to come to my house to party and then I’ll get to know them, or someone will do something somehow.
David: With girls, that wasn’t the case, with girls. I always felt like money was going to be a dangerous game to play for attracting women. It was more like I was bullied in middle school, and I was the guy who to make me feel better. It was like, “Oh, those are the guys who are going to be your gardeners when you grow up and you’re rich and famous and whatever.” And I will tell you that there is a permanent, as much as I would like to, or I’m trying to get rid of it, a chip on my shoulder from that experience. It’s probably not very healthy. It’s probably something that I should go to therapy about, but I have a built in . . . I’ve talked to a few people about this kind of internal. It’s not . . . I wouldn’t call anger, like where it’s like toxic anger or in like, you know, harming you or something. It’s more like I’m pissed off for success sort of deal. And I’m also like . . .
Andrew: Still to this day when you’re working late, when you’re coming up with a new piece of copy, when you’re doing something that most people would just say, “I already did it. I don’t want to have any more.” When you push yourself that extra step, it’s because of that. You still remember it?
David: It’s not like I’m overtly thinking about it. Like, “Oh, damn you Steve for middle school.” It’s just, there’s something there that’s built in. I think there’s stuff that’s been built on top of that, which is that like my identity. I’m very robotic about it, but my identity is I have decided that I am not someone who does incomplete projects or doesn’t finish something or doesn’t actually be the person who wants to be. So on those nights, they’re part of the fuel of getting to that point in the first place.
Was that like, you know, those, you know, jerks in middle school or whatever. And then the other part of it is just like, I’m not going to mess this up, I’m going to do this thing and that’s how it’s going to be. That’s all I can . . . That’s all I’ve got really.
Andrew: You know one other bit of psychology before we get into your business and how you’re doing. There was a guy at the conference, Jesse Elder, I never met him in person before. You know, Jesse, right?
David: I love Jesse. He’s great.
Andrew: Everybody loves Jessie. I don’t know what it is about him, but everyone loves it. But here’s the thing though, that I did notice that I can put my finger on. He dresses really cool. He’s got a shaved head, a beard that is immaculate, but a kind of casual like he’s going to see through the world and he’s ready to go like he did in the snow and do a video of himself to post somewhere.
Andrew: You don’t feel worthy of that. I get the sense like, you feel like I’m still the middle school guy. I’m not Jesse Elder. I’m not the guy to be on camera. Nobody . . . Right?
David: Yeah, there’s definitely some part of that where it’s like, I’ve gotten better at this, but there’s definitely some comparison stuff where I’m like, “Who am I to talk about this thing publicly or proclaim myself as an expert or whatever?” And that’s definitely been something that I have struggled with. I have gotten better at that, and I even like this year I finally put myself a bit out there and sold something that was like just for me. So I’m doing like a content marketing workshop in Boulder here, which is like I’m stoked about it. It’s great. But it was like the first time I’ve ever been like, “Hey, pay me directly for this, this product.”
I mean, that’s a workshops, so you can call it a product. But, yeah, I see a lot of other people and I’m like, “They’re way better than me” or like, you know, I’m looking at like a guy like Elon Musk or something who I’m not even a millionth of a percentage of a guy like that. And I’m like, you know, let him take care of the big stuff.
Andrew: They’re bunch of people. And in this Paleo world, in this keto world, there are bunch of personalities who are personalities. Like they feel like I was born to have a spotlight on me and to tell the rest of the world, not just how to live, but how to eat and how to have sex, that this is who they are. I’m not talking about Jesse Elder necessarily, but I’m talking about like this collection of people, you don’t feel like you’re there. And to me, that’s what makes you interesting. And because despite all that, you are now running PaleoHacks, revenue from PaleoHacks last year, 2017 was what?
David: 2017 was 6.5 million bucks.
Andrew: Six and a half million dollars. How much of that was profit?
David: I can explain why this is the case, but our margins were below 10% last year. About 8% margins after I was paid. And you want me to dig into why that is?
Andrew: Yeah, let’s go. We’ve got real entrepreneurs. They’ll understand it.
Andrew: Yeah, so last year was essentially the final year of us figuring out how to be super profitable Facebook ads. And for the majority of 2017, we were losing money as we were optimizing our campaign and that rapidly increased over the summer when we started working with a really good agency. And basically we weren’t profitable on Facebook ads, at least one day zero earnings until the end of October for the year. So all the money, we made a lot of money from November to December. We made a lot of revenue up until then, but most of the profit just came at the end of the year. So this year our margins are looking more like 20 to 30% range, which is about standard in my experience. But last year we were operated very tight because we were just like, “We’re going to figure this out. It doesn’t matter what it takes, we’re going to make this work.” Because Facebook ads or paid media in general is like just a goldmine once it working.
Andrew: And you took over the business. What year?
David: I became part owner of the business with Mike in 2014, May 12, 2014.
Andrew: All right, we’ll talk about who Mike is because he’s an interesting personality that I never heard of before you. I don’t think directly, but, boy, I looked him up while you and I were talking before this interview started. He’s done some amazing stuff, so we’ve all seen his work. But first let’s go back in time a little bit. You told our producer, and this is where I started, like armchair psychoanalyzing you said “The first sentence in his notes to me where, I’ve always been someone who comes into something already built and I improve it.” First thing I got into is this drop shipping business that sold food online. Tell me about that. Or that’s one of the examples. What is that drop shipping business and what happened to it?
David: Well, so that whole statement is immediately proven incorrect by the improve part. That with the food company. In 2000 and I want to say 2010 or 2009, 2010. I dropped out of college and I’m very fortunate. I have a little bit of shame around this, but I’m very fortunate in that my parents put together a college fund for me from birth and when I dropped out of school, the money that was left over in that account was mine. And so instead of wasting it on tuition, I decided to do the school of hard knocks, which was buy a business and see what’s going to happen.
Andrew: I wish I would’ve done that. I had no idea that was even a possibility. I would have done that. Okay.
David: Well, I mean, you have to have a significant amount of money left over from your parents to start so that rightfully helps. I partnered up with my roommate from college and we both brought in money from my money, part from his money. And then we bought this business called True Foods Market off of Flippa.
Andrew: And it’s still available to truefoodmarkets.com. I’m on their site right now, right?
David: It still exists. So we sold it.
Andrew: Wait before you jump to the sell. You bought it for how much and what did you do to it?
David: Bought it for $475,000. And so by the way, there four sites, it was True Foods Market, I can’t remember the other four, three now. Wow it’s been so long, but there’s three other . . . They were basically all clones of each other. They were on a site, a platform called Alice Commerce [SP]. And we came in and I didn’t know anything about e-commerce at all at the time. And our goal was basically to just turn it into a real thing. So our first task was to switch to Magento, because I had been sold by Magento is the be all end all free commerce. It’s basically exactly like Amazon, you know, you’ll have an Amazon type store.
By the way, that’s super not true. And if you are investigating with Magento, god, I hope you have tech help for that because it is not something where you can just have one random Magento developer. So we spent like a year from shifting over to Magento. It was a disaster.
We wasted a lot of money. We worked with a few really bad developers. And yeah, you can say that essentially the money went into the acquisition of the business, then more of my money went into the like fixing the business, and then finally it was just such a disaster and I had so many other opportunities coming to me that we sold it, I believe in 2012 or 2013. Gosh, for like $13,000. So we had a big exit, you know, just killed it. And but the really nice thing about that experience was I got a really big tax write off that year. So that was nice.
Andrew: Which you can then carry forward for a few years, can’t you?
David: I forget the entire details. I’m not sure if I . . .
Andrew: You know what actually, I take it back. I’m not sure I would need to know a little bit more to do that. But here’s what I am seeing, the site is still up but not fully. Like still broken images and stuff. Are they doing drop shipping? Did they do drop shipping of food when you had it? So all you have to do is get sales?
David: Yeah, we were the drop shipper, so we worked with a couple of different suppliers, which for anybody who’s in the food industry will know our struggles of dealing with those sorts of companies. They don’t really care about you at all. And yeah, so we would, you know, the order would come to us, we’d send the orders to the, the drop shipper, coordinate ship the product directly there. Now the problem was, and part of the reason why we ended up, I probably this is like a self-sabotage thing. I never really believed we would ever be able to compete with a company like Amazon.
Right. I mean because obvious reasons, and we were selling very similar products for more expensive and the shipping prices we really never be able to compete on. So I kind of was just like, “I’m not sure if this will ever work out.” But it was a good lesson. So yeah, we sold it to a guy and frankly, I mean, we trained them for as long as we stipulated in the deal, but I really have no idea what’s happened to it since then. I haven’t looked at it.
Andrew: What did you think you were going to do to the business? And what did you do right before we pass on from this?
David: I thought that I’m better technology was going to . . . This is a mistake that I used to make, which is basically shiny objects of good technology and just being like, “Yeah, we’ll just make an Amazon clone, it will be great, you know, whatever.” Like I and I fell in love with a developer who was like a friend kind of before and was an unmitigated disaster and a person I really should have never hired . . .
Andrew: You mean really in love or just loved the work?
David: Love the work not really love, but that will be an expression I’ll probably use. But basically like I was being, I was new to all this. So I was being sold on big promises of what things could do and not really evaluating it from a realistic perspective, which is to say that like dev stuff, unless you have a really great person who’s proven themselves to you, it never works out the way you think it’s going to. It’s always going to be more expensive, it’s always going to take longer.
And so yeah basically I thought we were going to get better tech, and I thought that I was just, you know, invincible, that like, yeah, just touch it, it’ll turn into gold, but it was a lot more of a problem and a lot more work to than I anticipated. I’m a direct response guy where it’s like one product with a few upsells and a sales funnel, and that’s very easy for me. Doing a site with 5,000 [inaudible 00:15:44] and having to, you know, courting me. I’m sorry, I saw we cut for a second there. Having a user resources to coordinate for 5,000 products, that’s a totally different ballgame. It’s totally different mind-set and I really never, I never was able to make that mental switch. I think.
Andrew: You know what, that is something that I hope we’ll get some time to talk about. That you do . . . It does feel like you’ve got this formula almost to the point where a lot of people in this space, they self-sabotage by getting bored. They say, “I’ve figured it out, I need to move on. Right?” And so here’s what I highlighted in my notes that I got from our producer. I’ve got the roadmap for direct response. It’s already been written. It’s get a converting offer, get upsells, split test, optimize, get paid traffic scale, rinse and repeat. And that’s it, right?
David: Yeah, yeah. Super boring.
Andrew: And so, right. And I do agree that this is, it works and I want to spend more time with you understanding how you did that. So you said that there were other opportunities that came up as you did it. What are the other opportunities? What’d you end up doing?
David: At the time. The two things that came up were, two of my very close friends, one’s name is Adam Gilad and another’s name is John Romanello. They had information businesses and they are both, god I hope they listened to those two. They are both traditional ENFP entrepreneurs. Well, Adam, probably more so than John. John’s a little bit more straight and narrow sometimes, but they both needed someone to come in and basically take their assorted ideas that were all over the place and say, “No, no, no. This is what we’re doing. This is the plan.” and to be their integrator, basically the operator side and that’s where I really have a strong suit. I’m not so much . . .
Andrew: Why you? John Romanello is someone who I interviewed back when Ryan Holiday introduced me to him. He’s the health guy, the author, he’s got content marketing online, right?
David: Yeah. I’ve managed his New York Times book launch in 2012.
David: Yeah, yeah. I was running that whole thing.
Andrew: Why did he think that you are going to be the person who could do it? Why did you believe that you could do it?
David: John and I knew each other from basically the get go for him. Me and him met at an event called the Continuity Summit, or no, actually we met. Sorry, I had a better name, the Fast Track to Fitness Millions event in New Jersey with Pat Rigsby and those guys. And John was friends with another guy that you may know named Joel Marion, and John was just getting started online, so me and him were kind of getting started online in a very similar time. And basically, I was doing the work behind the scenes for Adam’s business and kind of let Roman know what I was doing. And he’s like, “Oh, I need someone to do that in mine.”
Andrew: Are you to be doing that for Adam’s business. Was it that you needed to make money because you’re sites weren’t doing well?
David: Yeah, I had like a local SEO, I was doing SEO for a few people while I was doing the drop shipping, and I was making some money, but there is a much bigger opportunity for me in diving into a direct response style business and really plugging myself in.
I just had so much energy and motivation behind that, but I never wanted to be the face of something. So I did very briefly have an information product with my name on it, which was a WordPress SEO info-product. But hated being in front facing thing of something and got rid of it as soon as possible. And yeah, basically I was like, I really want to do direct response funnels. I don’t really know what I want to do for myself. I’d rather plug in with someone who’s an expert on a subject and just run everything. Like it makes my life a lot easier because I don’t have . . . I can just be them, you know what I mean? Like from a, from a marketing perspective, and very easy for me to do that as opposed to being me and a marketing perspective, if that makes sense.
Andrew: It does. I feel like I could use someone like that at this point with Mixergy. I’ve seen people get that way, where they want that opportunity to just build something without the pressure of everything being on them.
David: Yeah. Well, I mean that’s still, there were still a lot of pressure on you don’t get me wrong, but it’s more like just the public facing thing, like to be the content creator and the operator of business was, I just didn’t want to do that. I didn’t have that much interest in creating content about stuff. I love business operations. I love systems. I love the marketing in general and I like being behind the scenes, and so it was a perfect fit for me for both of [inaudible 00:20:02].
Andrew: Was this WordPress SEO blueprint, was that your product?
David: Yeah, it still exists out there?
Andrew: It’s the website was the wpseoblueprint.com.
David: I think so, yeah. We couldn’t use the word full WordPress, because WordPress doesn’t like when you do that.
Andrew: I didn’t know that. WordPress can be pretty tough on people who do things that they shouldn’t . . .
David: They have it pretty [inaudible 00:20:24] trademark. Let me say that.
Andrew: All right. Yeah, I keep doing research even as we’re talking. Let me talk a bit for about my sponsor and then come back in here and continue with the story. So my sponsor is a company called Toptal, and I think frankly, David, you could have used Toptal back when you were switching over to Magento. And the reason is that I agree with you about Magento. I actually think that they started off taking on OS commerce, and then they became as bloated as them and it became really tough, and then Shopify came in and just crushed everybody. It seems like, right?
But if you hadn’t had your friend who you loved their work but didn’t love personally, I mean you weren’t in love in a relationship with them.
David:Not at that point.
Andrew:And if you need a developer I would’ve suggested, look, you go to Toptal, and the reason that you want to go to Toptal for something like this is that they have people who just do this stuff all day long, and more than that. I looked at Toptal back in and they’re very uptight about me revealing too much. But fucking it . . . if they leave, they’ll leave.
It’s such a basic thing, but they never like from you to reveal anything about how the business works. You just have to be really quiet. Forget it. Then I won’t reveal, but basically what they do is they get all these people who work in the same platforms to communicate with each other, so if they’re working for you, and they have a problem they can’t overcome. They don’t have to think about it on their own or come back to you and say, how would I do this in Magento? They have this team of other people that they could tap into. So what Toptal realizes, we have the best developers, let’s create a hive mine, so if any one of them needs someone to brainstorm with, think through an idea with just get unstuck from, let’s introduce them to each other.
And that little bit of edge is what separates them from so many other sites. It’s great, great developers who then also have access to other great developers, which is partially why so many people want to actually be in the Toptal network, developers love being in that network. And most of them will not make it in because Toptal is very picky about who they allow in. So if you’re an entrepreneur, if you’ve got a developer team and you need to augment it, add more to it, I urge you to check out Toptal. If you have just one developer and you’re looking to start to build up, I urge you to go check out Toptal.
If you’re looking to hire full time, part time, project basis, I could forget the laundry list. Guys, you’ve heard me talking about them forever. You’ve heard my interviewees take down their name. I’m going to urge you to do the same thing, whether you need them or a friend needs them. You’re going to be glad that I gave you this referral. Not just at Toptal, but to the website where you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no risk trial period of up to two weeks.
Think about that. No risk trial period. The URL is top as in top of your head, tal as in talent, toptal.com/mixergy. Go check them out and I was going to say Andrew sent you. You don’t even have to. Frankly, even if you hate me and you don’t want me to get credit for it. I still love you guys and I will want you to go sign up for Toptal because it’s going to change your business. Really, change the way you think about developers.
All right. So you were doing all this stuff, David, and you said, “I think I’ve got something here.” How did you end up in the Paleo world?
David: So when I was working behind the scenes with Adam and Roman, and I got this idea that I could do more of it and I could scale this business operations thing. This is still like I’m still in my twenties for a few more months, but this is my twenties ego talking, And at the end of August I’m going to come back and say, you know, in my twenties I used to think like this, but basically I thought I could do this for more people. And so I started kind of reaching out and had some feelers and basically had a partnership with a guy named AJ where we decided we were going to go out and do this with a few different people.
And one of the people that came to us was a guy named Patrick and a company called PaleoHacks. And it was referred to us through a guy named Neil Patel, who I think the listeners might know. And basically PaleoHacks at the time was just a forum that was very popular, but it was making like a couple grand a month and there was an email list, but it wasn’t being used. There was no products, there was nothing. And I just so happened I had just started eating Paleo within the previous year and a half or so, which had changed my life dramatically.
And in 2011 when I moved to San Diego, I was like 22 or 23. And I felt like I was a 90 year old man from a perspective of like, I couldn’t remember anything where I was leaving my car. Every time I left the apartment I’d have to go back in the apartment like seven times to get something that I forgot. I was exhausted during the day but couldn’t sleep at night. I was depressed, I was anxious, I had all sorts of weird stuff that was like, for most of my life, it was kind of like that, especially depression. That was like a big issue for me.
Turns out that when I did some testing that my hormones were super out of whack, so I got my testosterone tested and happened to compare the numbers to my mom, who at the time was 56. Mom, sorry, that her testosterone was significantly higher than mine. Okay, so as a 23 year old male, a 56 year old women really shouldn’t have higher testosterone than you. So that was a huge red flag for me. Obviously it’s something was messed up, and it turned out a had something called [inaudible 00:25:48] fatigue.
Andrew: Well, you had what?
David: And essentially I had stage three adrenal fatigue. So essentially what that means is through various stressors on my body, whether it’s food I was eating or lifestyle habits, basically, my body was having trouble producing testosterone properly and that leads to all sorts of weird stuff like memory loss and anxiety and depression and insomnia and that sort of stuff. So a big part of it was my diet and I’m sure people listening have all their own opinions on like gluten intolerance and that sort of stuff. But truthfully, for me, one of my biggest staple foods was cereal, I would eat it for, you know, constantly.
And when my friend was like, hey dude, there’s this diet called Paleo, it’s going to help you out. We’re just going to eat like a shit ton of meat all day. I’m like, cool, that’s my favorite food. Love me some meat. So, I’ll do it, no-brainer. And like the first three months were pretty rough where I kind of went through this like detox phase I would say. And after that, I started feeling better month after month after month. And now sometimes I’m tired, sometimes pressed, whatever, but in general, my health now is like infinitely better than it ever when I was growing up. And I feel like as I’ve gotten older, I’ve actually kind of gotten younger sort of. And that’s why I look this way. I just don’t age. I’ve opted out of that.
Andrew: And you know what? I’m glad that you explained also Paleo and the effects of it. I went to Wikipedia, I was trying to find a non-controversial way of explaining it. And I like how right in Wikipedia, they called it a fad diet, in the first sentence. I realized, okay, I’m not going to get my none . . . I forget the word that I was about to say. I’m not going to get the right phrase from them. So you were then into this world, and was it at that point that you were introduced to PaleoHacks and you said, “You know what? AG and I could help them.” What’s AJ’s last name? I forget.
Andrew: Kumar, isn’t he also a relative of Neil Patel’s?
David: No, no, no. That’s Sujan.
Andrew: Sujan, okay. Oh, no. They went to school together and then right. And then Neil used to introduce him to people and Neil helped him a ton. All right. And so the two of you went to PaleoHacks and we said, “We’re going to help.” What did you help PaleoHacks with? What’d you do?
David: Running into a business really is the best way to describe it. So I was like, we should build a blog, which is one of the first projects we took up . . .
Andrew: This was 2013 that you did that?
David: Yeah, I think the first half of 2013. And I also said, you know, we needed a product, we don’t have any products but we have this email list and people who I know buy them, so let’s do it. And so we also created a cookbook, but with that actually, instead of creating cookbooks from scratch, this was, this was really easy. I just went on Clickbank and the number one Paleo cookbook was a woman named Nikki Young and her marketing was okay, but there wasn’t really any competition to her.
And I was like, “Hey, let’s just license this cookbook from her and rebrand it and everything and we’ll do that.” And we gave her a royalty, and so we rebranded it. We did that because creating cookbook, we’d create our own fully from scratch now, but it’s a time-intensive process. It’s not, especially if there’s like baked goods, you know, when you’re testing a recipe and every test takes a minimum of an hour that adds up when you have like hundreds of recipes. So we just licensed it, and then we became the number one cookbook and Clickbank after that.
Andrew: So you get a payment every time you sold. You didn’t even commit to any amount. You know what? Looking at an earlier version. Oh, sorry. Go ahead.
David: As the percentage of each sale.
Andrew: Percentage of each sale. I’m looking at PaleoHacks from a 2013. It was an old Stack Exchange site. Stack Exchange was a place where you could add . . . it was software that you can use to create a question and answer site. Anyone could write a question, other people could vote on it, they could answer it, and then we all vote on what the best answer is. I had a Stack Exchange site at the time and I had a hard time making it work, and I let it languish. And then Stack Exchange Joel Spolsky the founder of the company said, you know what? On second thought, I don’t want everyone to use the software. I had them on to do an interview the day that he stopped that.
He let us all use it for a lot longer than he thought he would. And he said,” You know what? These guys, trust me, I’ll let them use it.” But you guys made it work. Do you remember what it was that made it work for you guys where it didn’t work for so many others?
David: I think for PaleoHacks, the Stack Exchange stuff working was very much a factor of being in first person. So Patrick made it, I think back in 2009 or 2008. So in that was what, well, at least from 2010, I would say the 2014 maybe a little bit before that was when Paleo was absolutely at its hottest. So basically it was the only real place for people to talk and stuff.
I mean Mark Sisson had his forum on his site, but that was not Paleo. It’s his own thing. It’s Primal and it wasn’t as easy a forum. It’s not as easy to use a Stack Exchange type sites. Stack Exchange is built to be very easy to set up an account and immediately start participating. It’s gamified, it’s really amazing content management system. And so it was a big factor, just time and ease of use. You know, all for his, the demographic he was targeting at the time.
Andrew: I’m surprised it didn’t take off. And they then other people started copying it and multiple different ways. I think even Sujan Patel had a copy of it. Maybe it wasn’t Sujan, it was one of Neil Patel’s friends basically. Sorry.
David: Of Stack Exchange?
Andrew: Yeah, maybe it wasn’t Sujan. It was one of Neil Patel’s friends who basically said, “I’m going to copy Stack Exchange and make it into software that anyone can use.” Because Joel wouldn’t. I am, like I said, on the version of the site that you are managing at the time. And I see questions like, here’s one that had a lot of views. What to do with chicken backs and necks. Here’s another one. I’m Paleo diets for senior citizens. So people basically weren’t even asking a question, they needed to reform that as a question, but they were, they wanted to know a little bit more about how to have a Paleo lifestyle and what to do with the foods that they were interested in.
Oh, here. What’s the consensus on Stevia for examples, is a popular question. And so you said, “Look, this is not enough. We need a blog.” Why do you need a blog? Why? Why isn’t it enough that people were writing your own content, writing content for you?
David: I was, and am still relatively bearish on user-generated content. I think that it obviously was great for building up an audience, and user generated content and in general as good as a greater mix, I think of content, than just being all in because user generated content you can’t really control, and because we were, we are and were very much a Google focus business. I was always concerned that Google was going to be like, “You know what I don’t like anymore? I don’t like those short user-generated content posts. So we’re going to push those down in the rankings, and we’re going to focus on like long 2,500 word articles and stuff.”
Which, I mean we never, we’ve been very consistent with the forums, organic traffic for the past four years or whatever. But I would say that we’ve seen monumental increases in organic traffic from our content, that’s our created content specifically designed for Google and Facebook and all that sort of stuff than compared to the user-generated content. I just felt like we had more control over it. I’m big on diversifying your portfolio of stuff. I never really like relying on one source of anything, whether that’s like marketing strategy or paid traffic source or whatever it is. So it was more like a long-term mitigation of risk sort of approach. That’s how I, that’s why I do that.
Andrew: Who’s Patrik? I see Patrik is spelled P-A-T-R-I-K, right?
David: Yeah, though I feel like it’s different when I email him, sometimes it’s fully Patrick with a C. I’m not sure . . .
Andrew: . . . his last name a lot on the site. There was a question that I saw on a PaleoHacks asking who is the real Patrik? Is he a mystery guy? What is this? I’m the only one who doesn’t know?
David: No, he’s a real deal. His name is Patrick Vlaskovitz, and he wrote a New York Times best seller called “The Lean Entrepreneur” and I believe it was around 2013 that he did that. Patrick also has a company called Super Powered, which, he’s told me about it, but that the tech is a little bit outside of my wheelhouse, but essentially he’s creating some sort of software to help music producers I believe. And he’s got like some guy who’s amazing at it.
Andrew: Oh, you know what? I think I either know him or I read the book for an interview. Now I see. He wrote the book with Frank Cooper. I remember because this was back, I think when Eric Ries had a series of books on the lean startup.
David: Was almost like children’s book format for the . . . It was [inaudible 00:34:40].
Andrew: Right, at least cover looks like. It’s been a while since I read the book. All right. I got a sense now of who he is. Do you feel like he just didn’t want to be associated with the space because he’s in the startup world?
David: No, I really get that impression from him. It was more like he, as we continue to work together, he had more and more stuff coming his way and more opportunities where, you know, I’m not the easiest person to work with. I will be one of, hopefully the first person to admit that. And I think that and some of the ways that I do stuff is not as buttoned up as some people might like. And so I think that it was a combination of other opportunities, probably an increase in stress from probably me and my, the way that I work and also the stuff we were doing as a company.
And so I don’t think there’s ever a feeling of he didn’t want to be associated with it, but Patrick is a very, very, how would I describe it? Like an entrepreneur who is very much not emote, not going to get like super emotionally invested in stuff. He’s going to look at it very quantitatively, very strategically from a business perspective. As you were frozen for a second here.
Andrew: Yeah, there we go [inaudible 00:35:51].
David: Very [inaudible 00:35:53]. Yeah, so from a pure business perspective, he’s going to look at that stuff. And I think he just got to a point where he was like, “Okay, this is stressing me out. It’s not what I’m in love with. It’s making me money, but I’d rather focus . . . ”
Andrew: What was the stress related to it?
David: I would say the stress was specifically from a launch we did. So we did a summit in 2013 called Paleo Con, where we had my really good friend John Durant as the host of it. And it did well. It did really well. We made a lot of money and we added like 50,000 people to our email list. It was great.
Andrew: Fifty thousand people to the email list?
David: Yeah, yeah, that’s really good. But I don’t know how many launches you have been a part of, but they can be extraordinarily stressful. And when you have one person running the launch and then you have another person who is like, “This is my baby and I own this thing and I swear to God, if you mess it up, I’m going to ruin you.” Sort of saying that sort of thing. And it’s not really like that intense, but you know what I mean.
Andrew: Yeah, yeah. Right, I feel that way about Mixergy, right? Like, don’t fuck with my name here because it is so associated with me. It’s hard.
David: Yeah. And so I think he had some general anxiety about like, there’s a lot of stuff going on. It would’ve been easy for something to break and like ruin his reputation or something like that. And I think like in general, again, it kind of a combination of that plus it not being, him not seeing himself in this role long-term, came to the point where he’s like, you know, I just don’t, even if even though the money is good, even though this is heading in the right direction, I just don’t. I’d rather just pass it off and focus on the stuff that I’m best at.
Andrew: Are these the people that you guys got to participate? Dave Asprey, you’ve got Mark Sisson, who we talked about earlier, who’s a killer name on his own. Abel James. I know him. John Durant. So you got a bunch of . . . Oh, Maneesh Sethi and all these people that help promote it and their names help promote it. And that means that everyone who wants to come watch them is entering their email address, and as a result you grow your list, and then everyone afterwards who missed it or wants it or a copy of it comes back to the site, and to this day they can go to Paleocon.com and buy it for what? 50 bucks.
David: Yeah, that’s the recording from the events, for sure [inaudible 00:38:02].
Andrew: And then there’s an upsell and all that other stuff that you’re talking about is still in there.
Andrew: All right. I get it. Let me take a moment to talk about my second sponsor and then we’ll continue with the story, because if he wasn’t excited about it and you were, I’m curious about what you did to transition.
So the second sponsor is a company called HostGator point. Boy I can’t, for some reason, I can’t remember the name of the guy at Baby Bathwater, but he was basically really well-dressed guy. Always had interesting hats on, and we shared a room, not a room. We shared a lodge. We each had our own room, our own bathroom, which actually I didn’t know. At the end last day we’re kind of hanging out in the living room of this place at Baby Bathwater and I say to him, “Can I ask you a personal question?”
And he goes, I could tell he wanted to say no, but he said yes despite himself. I said, “Why don’t you shower?” Because I was being so clean with the shower and he goes, “I showered every day. What do you mean go?” I go, “I keep like looking in the shower. The towels aren’t being used or anything.” And he goes, “I have fricking shower my room. I’m not slumming it with you sharing it.” And I had no idea. And of course, I should have known these people. Baby Bathwater, I think the name is just such a weird name and I think they love that it’s weird. They love that it turns people off, but it’s like everything despite their cool attitude, everything is so well taken care of, like whatever you need, you need a ride to the top of the mountain you can ski, go get a ride.
You need somebody to draw out for you where are you going to go run? Because I’m not a skier. I’m one to run. They even draw it out for you, your vegetarian, which I am. They don’t know how they knew. I know actually how they did it. I don’t want to talk too much about Baby Bathwater because I got to talk about a HostGator, but I’m just fascinated by them.
Someone from Baby Bathwater walks up to me and said, “You’re Andrew, right?” I go, “Yes,” She puts a green napkin on my plate. She says, “We want to make sure you get your vegetarian food.” I said later on, “How did you know it was me?” She said, “We studied the attendees before they come.” This is brilliant. All right, and then you took a photo. The number one most liked photo in the app. They have a great app. You know which one am I talking about? Tell them.
David: So yeah, the co-founder of Baby Bathwater is a guy named Michael Lovitch who is just an experienced partier. And I caught him taking a nap in the middle of a room. And this is actually a bar, I wouldn’t say a room as a [statement 00:40:24], passed out a no, actually passed out sounds like he was passed out drunk. Let’s say taking a nap right with his daughter on the couch in the middle of a room of 50 to 60, like loud, you know.
Andrew: Someone who was doing all kinds of weird drugs. Others are drinking and then others will not touch a drink. Will only touch meat, you know, and water. And the reason that I love that photo is every detail was taken care of, but they didn’t have to . . . The two co-founders didn’t have to do anything. That’s a business. That’s a business all. So here’s the thing. So this guy, I finally at the end discover what he does. He has this website where you can go and pay him money, and he’s going to tell you what to text your wife to get your wife into bed. It’s like the thing . . . Sorry?
David: Chris Haddad is who you’re talking about.
Andrew: Yeah, Chris. So the thing that makes me remember HostGator with that is, all you need is a website, ability to collect payment, and an interesting hook like that, and he’s got nothing . . . He’s doesn’t have like complicated technologies, he’s not installing Magento on this freaking thing. He just says, “Look, everyone’s telling you how to go a get laid by some woman on the street. There a bunch of people who are in relationships, they want to have more intimacy. They want to actually like reconnect with their wives. Maybe their wives aren’t paying attention to them. I’m going to create this thing.”
Listen guys, if you’re out there and you have an idea, it is still so interesting how you can take your idea, good copywriting, good clever hook, and a little bit of marketing and turn it into something really big. And if you want to go to hostgator.com. If you want to have it hosted, go to hostgator.com because frankly HostGator will host it right and not charge you that much. We’re looking at under 3 bucks a month under one of their plans.
You can go to hostgator.com/mixergy to get details, and as you scale up the business, maybe you’re buying more traffic, maybe you’re doing a virtual summit, maybe you’re doing something else that’s working for you. You want to scale it up. They don’t list it on their website because all they do is they show their cheaper plans, but they’ll get anything that you’re looking for, including managed WordPress hosting, dedicated server, whatever you need. They’ll scale it up and they’ll charge you less than the competition. hostgator.com/mixergy. Many, many interviewees here on Mixergy have said, “Hey, you know what? I signed up for HostGator.”
And they recommended and I do to. Go to hostgator.com/mixergy. Be sure to check out that $100 ad-words offer it, comes with the account. And don’t worry, they’ve got a 45 day money back guarantee, hostgator.com/mixergy.
You know what? I just freaking love doing the ads in these things because I used to I used to be a radio guy. I love listening to radio I mean, and I read this, I got this audio book about Paul Harvey and Paul Harvey was the guy was making the most money in this gig of radio. In fact, Forbes magazine at the time said, “You think CEOs make a lot of money. Check out how much Paul Harvey makes.” And it was even more than CEOs.
And what was interesting about him and other people like him who succeeded in radio there were good at their craft. They did their research. They did their work. He would steam and run up and down the hallway as like stuffy as he was to get his voice ready, but they pride themselves on doing well with their ads. That they were going to be really good and take it seriously. There’s great article somewhere now about Shaquille O’Neil. He’s making way more money now endorsing products like ICY HOT, do you know what I’m talking about? It’s probably not even ICY HOT. Is it ICY HOT?
Andrew: He’s got tons of these endorsements, but the thing that apparently separates him from others is he doesn’t just do all these. He brings all of these companies together and says, “What can I do for you? Let’s get us all together and talk strategy. So I’m not just going to be the pitch man. I’m going to be the guy helping you.” Ring.com, he’s got that, right?
David: Yeah, he, you know, he’s done enormously well. He also said he only works with companies that he really can get behind. I think he’s, there was like a whole thing where Wheaties wanted him to be on the cover, and he’s like, “I don’t eat Wheaties. I’m not going to have to cover a Wheaties.” And there you go.
Andrew: Yeah, it makes sense. And only things that are like he knows that what he wants is the middle class, that’s his niche. That’s his audience. Really clever. So where I think other people turn away from ads and I noticed more and more podcasters are playing music under their ads to separate and say, “Look, I’m playing music. I don’t really love this. This is my way of signaling to. They’re paying me.” I want to be the opposite. The person who really cares and he runs the ads that I care about. All right, coming back to you.
David: Please, by all means.
Andrew:We’re here to do an interview with David and not talk about Andrew and his philosophy on advertising. So now you’re in this space. Patrick is interested in moving on. I guess you don’t have the money to go and buy it. Why didn’t you just by yourself?
David: Because it was a very substantial amount of money for me. I shouldn’t say substantial amount for money for me. Like there was even a realistic possibility of me being able to afford it. It was like a significant six figure sum of money that I just didn’t have laying around, which would have been really nice, because that would have taken it in a heartbeat. But, yeah, I did not, I could definitely couldn’t afford it.
Andrew: You told our producer I went to talk to my mentor about it. Who’s this mentor who helped you out?
David: Michael Lovitch in fact.
David: Yeah, one of the few people I have ever paid for consulting, and probably the highest ROI consultant for me because I would directly, I wouldn’t say it’s necessarily something he did in particular, but it conversations with him and [inaudible 00:45:46] not strongly led to . . . Hang on. Did we freeze for a second or you’re standing very still?
Andrew: No, hope I’m not.
David: No, you’re good. So Lovitch and me talked to a lot because I was like, “Hey, I’ve got this thing, you know, it’s working out well, but the owner wants to break off or whatever.” I’m like, “Do you know anybody I should sell it to?” And we discussed a lot of that sort of stuff and, you know, Geary, Mike Geary came to where I was like, “What about Mike Geary?” And he was like, “That’s perfect. That would be, he’d be a great guy for it.” And also Michael’s co-founder Hollis is best friends with Mike.
And so at this time, I had no relationship with whatsoever, but I was like, “Oh, maybe between Hollis and Michael and myself, we can get this on his radar and see if he would be the acquirer.” Because Mike has been enormously successful online for over a decade. The one weird trick sort of stuff that you see these days . . .
Andrew: That was that hook, that headline that he wrote. One weird trick to do what?
David: To get a flat belly. I am pretty certain that he is the one who came up with that. If he wasn’t, he’s the one who popularized it for sure. And so he had been enormously successful with a product called The Truth about Abs, from 2006, I want to say. And he was one of the first guys to get at least in our little health and fitness space to get ad-words working profitably. And so while everyone else was focused on affiliates, Mike was on paid media. And so his business grew exponentially faster than a lot of the other people in the space. And after doing that for many, many years, Mike had some disposable income and was looking for investment opportunities.
And so essentially when we finished up Paleo Con the event, Patrick was kind of like, you know, “If things are going to be this stressful. I really would like to you know, get rid of the business and whatnot.” I’m like, “Whoa, whoa, hang on. Like let me, let me see what I can do here.” And so I’m the first person I actually reached out to was Mark Sisson, who was not really interested. It wasn’t really a good fit for him and I think it was the better decision for both of us, truthfully. Because Mark’s got his own thing, Primal. And so like he basically created a blue ocean in this Paleo space by making up his own diet protocol. And so like, wow, we do have complementary businesses and that PaleoHacks will promote Mark Sisson when he’s got stuff that’s worth us promoting and so on, and they’ll promote our cookbooks as well.
It wasn’t like a seamless fit. And I don’t know if this is true or not, but me and him might have had different opinions on how the business should have been run or something. That never came up. But I had a hunch that might have ended up coming. Who knows really? But it’s just . . .
Andrew: He’s the kind of person who is just invented the ideal life for himself, that you look at him, he’s an older guy. I asked him to show me his abs in an interview. He lifted his shirt, he showed me his abs. There’s no, like, no hidden tricks here. Middle of the day, he’ll just go and take a walk in his back . . . not a walk in his backyard. He’ll do what is that tight rope in his backyard type of thing. That’s his life.
David: So Sisson has been running. He, I think he just moved out of Malibu, but he was running an ultimate Frisbee game up there every Sunday for 17 years. And so I’d go up and play with them occasionally. And yeah, he’s probably the third oldest guy on the field, but easily the most fit by far. Like not even . . .
Andrew: So yeah, he doesn’t, I get why he wouldn’t want to mess with anything else and I guess how, and I get how you’re looking for someone different. Mike Geary, his background was help . . . He would be a good fit. Was it a tough decision for him to buy it? Was it a tough purchase?
David: Mike is the most numbers focus, left-brain analytical person maybe on the planet. And so essentially what happened was I emailed him a couple times. It wasn’t like, “Bro, I have this thing I want to talk to you on the phone.” Wouldn’t get on the phone with me and by the way, business partners for four years now and we still, that’s still like something we like, he’s not a phone guy. And finally I was like, okay. And the email, I was like, “Dude, I want you to buy this company. Like it’s legit.” And he was like, “Oh, okay, let’s get on the phone like tonight.” I was like, “Oh, my God, this whole time I could’ve been on the phone.” And because Patrick had set a deadline for me to find somebody to . . .
Andrew: And the reason you didn’t get on the phone with him before was you were an explicit. I said want to get on the phone without saying I’m going to get on the phone so you could buy this business.
David: Yeah, I wanted to save the story for the phone, which was a mistake I’ve learned now that that’s not a good way to get people on the phone, because I’m like I’m not going to get baited into a phone call with somebody . . .
Andrew: Which I don’t know what it’s about, right. Yeah. And phone call is a really tough thing to schedule anyway.
David: Totally, very busy person. And so I wrote, basically for him, he was just like, I had promoted some of his products through PaleoHacks as an affiliate, and he basically was like, “Okay, I know that for each email you send out with the email list, it makes X amount of dollars and I think that the email list will grow this amount over the next amount of years. And based on that, I think I’ll be paid back in a year and a half or two years with all things being equal. So yeah, sure, let’s do it. It makes sense.”
Like, and he asked around our space and got some people to vouch for me, including Lovitch and Hollis, which was very good. And then about three months, maybe three months, two to three months after that decision was made, was when the deal was finalized because contract negotiations can take forever and all that sort of stuff. So yeah, he took it over in May of 2014, bought it from Patrick. And so, and then I have vested equity over time to being almost 50/50, but not quite 60/30.
Andrew: Wow, over how long? When do you get to the almost 50/50 mark?
David: I’m at 40. So I did that. So we are, I’m next.
Andrew: So wow, so without having to put in money, just putting in the effort to run it. You’re getting close to 50/50. I see. Okay, so it wasn’t just like, “Hey, buy this company so I have a job. It’s by this company so that we own this company together and I can make it into . . . ”
David: Absolutely. There is no way I was going to commit myself to something long, because I knew that we were going to grow it and I knew it was going to work out well. I knew that my financial help was minimal, especially compared to Mike. But I knew that he wasn’t going to build the, he wasn’t going to work on it. He was like, “I’ll make this part of my portfolio of companies and you can be the CEO and operator.” And I was like, “Yeah, that’s great, but I need ownership, you know, I need, I need significant ownership. I’m not going tap . . . ”
Andrew: You said right off of bat, “I need to get to significant ownership and here’s how it’s going to look.”
David: Because I was going to get ownership with Patrick, but essentially the timing worked out so that right before we had to make that decision, he moved it off to Mike.
Andrew: The business sell for more than a quarter million dollars in cash?
David: Yes, yeah, yeah.
Andrew: So we’re talking about a significant amount of money. You couldn’t even borrowed it to get to that.
David: You know, I grew up in an affluent family, but this was a sum of money that there was no way. There is no way I was going to . . .
Andrew: Over a million?
David: No, no, no. It’s like, I think the final price was like 450k.
Andrew: Wow, right. And it’s a big investment. What Mike . . . tell me if I’m misunderstanding. What Mike also bring . . . How do feel about saying that number? I’m looking at your eyes and I see that you’re a little hesitant.
David: To say that was the final price, but it was basically for 450 straight up, 500 but over a period of time over 550 over a longer period of time. And Patrick picked the . . .
Andrew: Four fifty all at once.
Andrew: And what your thinking was, “Mike’s product alone could help us pay for the whole business, because if we just run his product, it . . . ?” No.
David: That wasn’t what I was thinking at all actually. What I was thinking is Mike has an email list of 20,000 affiliates. That’s not his marketing email list, which is like a million people. This is just people who he knows that will promote. And so in our space, Mike has such a good reputation that when he says, “Hey, I just bought this company PaleoHacks, and has this cookbook that converts well from my list, you should promote it.”
Immediately, and I’m talking about overnight. We’re generating like 20 to 50 extra sales per day, rapidly increasing because all these affiliates are plugging us into their traffic all of a sudden, so that’s one thing. Another thing is that Mike being financially successful for so long, had capital to invest in the company for other stuff, because it’s not just like when you acquire a company . . . When you acquire a company, there’s no money in that bank account, right?
So you have to have working capital on top of that. So with the initial investment plus an extra probably six figure sum of money that was another thing. And also, you know, he didn’t have any financial pressure at all. So like there was never this like, “Oh my God, we better make this work.” Or like, “It’s, you know, it’s going to ruin my life.” Or something like that. Like he was always fine and okay with, you know, the logistics of acquiring company and in a long-term.
Also me and him see very eye to eye about business. We’re both very left brain, very . . . I’m probably a little more emotional I think. But in general, we both, if Mike says, “Hey Dave, I have this idea for you, it’s going to make you more money.” Guaranteed is going to make me more money because Mike has proven it or tested it. He doesn’t just say theory stuff. That’s just not how he operates. So yeah . . .
Andrew: And you guys still don’t communicate by phone? If you communicate. It’s not email, is it?
David: It’s email. We recently had a funny conversation in email where, I wasn’t . . . I didn’t like think about how my words were going to come off, and then me and him got into a funny back and forth and then we talked about it in person. It was like, “Had we just talked in person from the start, there would’ve never been any, you know, there’d been never been on miscommunication.” And so like we definitely emails are our in channel, but the truth is the easiest way to get ahold of him and just go to his house in Utah, and then that’s when I can get, we get our most talking done.
So, you know, we email out like almost every day and then if I can get them on the phone when I need to, I will. But other than that, I’ll just fly to Utah, get on the street.
Andrew: Were you there . . . So we met in Utah. You and I at Baby Bathwater. Did you get to go see Mike around that time too, since you’re there anyway?
David: Yes. So he lives in Huntsville, which is right down the street from Powder Mountain or where Powder Mountain is. And so I stayed at his house.
Andrew: You drive up to Powder Mountain every day to be with everyone?
David: Yeah, yeah. I rented a car and everything. Which was very interesting as you know, because of the weather conditions on this most event. My Hyundai Santa Fe, amazing conference for snow [inaudible 00:56:14]. Hyundai Santa Fe, can’t go wrong.
Andrew: Wow. I can’t believe, there were handful of people who drive their own cars. I just couldn’t imagine dealing with the snow. So what did you do to change things once you bought it? Well, actually, you know what? There’s something that. Let me take us off track for a moment just to understand. You said they’ll plug us. These affiliates will plug us into their traffic. What does that mean?
David: It means a couple of things. One is that most of these people had products that they were selling and had email sequences after you purchase the product that usually we’re promoting other affiliate offers. So plugging us into those email sequences . . .
Andrew: And they do it after you buy the product? They don’t do it if you don’t buy it?
David: Oh, they have those to. So we’re plugged in to a customer autoresponders, we’re plugged into lead autoresponders like leading up to this. So like . . . .
Andrew:That’s how this business works. Somebody says, I’ve got these people on buying traffic anyway, I can create enough product to maximize my revenue from them. I’m going to put this stuff on the back end. Okay.
David:And also through email broadcasts as well. So not just automated email sequences but just like, you know, a lot of the guys in our space mail their list every day and so they are looking for offers to send to those lists. And so we were one that was new, unique, that hadn’t been promoted before in the space. And so it was a good fit because it was a converting offer and that’s really the big key. But a converting offer plus Mike getting on a megaphone and saying, “hey, promote this,” that was a match made in heaven in that. I mean, really, it was almost like immediate that we would probably quintupling our sales revenue, when he came onboard, just again . . .
Andrew:Just from the relationships.
David:And also from Mike promoting our stuff as well. I mean, Mike has an enormous following. He’s got other partners that in companies that he’s invested in as well that will promote us and stuff. And so we had a whole network essentially built in right off the bat.
Andrew:And this was all for a book that you guys didn’t write. Your idea was to go and partner with someone who had it and you still have. So today I have to tell you, in researching, you fucking a, dude, I curse so much, but when I get passionate, I curse. I’ve got to stop that. You guys have such beautiful looking recipes. There’s one for some pancake that doesn’t include the stuff that’s usually in pancakes. There’s another one where you hollow out a cucumber and you put something else in it. I was researching you and so I keep looking at this stuff and I got hungry. So today it’s all your own photos, your own recipes?
David:Not my photos, I’ll say that.
Andrew:But your company?
David:Yeah, yeah. Everything we do now in terms of recipe stuff is custom. So when we hire writers, they are essentially a professional food [photographers 00:58:49] as well. So we used to do stock photos when we didn’t have as much resources, but as soon as we can, as soon as that was a viable option, we immediately switched because we wanted real food stuff and whatnot.
Andrew:You know what? I see it actually. So you guys had some kind of a deal with Pop Sugar. You post recipes on Pop Sugar.
David:We [inaudible 00:59:08] some of our content to Pop Sugar.
Andrew:And so some of those photos are not yours, but I can see that the others are like, start your day off right with these scrumptious Paleo keto waffles. And that’s published by PaleoHacks. And those are the content.
David:What you’re seeing is like a compilation posts probably. So when we do an individual recipe that’s all us. But sometimes we’ll do like 33 coconut flour recipes or something where . . .
Andrew:No, this one is a . . . it’s not a competition. This one is just a Paleo waffles.
David:Then maybe we . . . either we’re syndicating from Pop Sugar or we’re syndicating to Pop Sugar. But yeah, sometimes I guess we are syndicating people’s content.
Andrew:No, no, sorry. Just to be clear, this is you guys posting on their site and then you get a link back to your site.
David:So we created that recipe uniquely on our site. They will syndicate it and link back.
Andrew:Yup. Yup. Exactly. I see. And even the image source is PaleoHacks at that point. So this is how far you guys have come from, not even having your own product to now creating recipes for blog posts, which then you turn it into a book. What else did you do to, once you took over to improve the business?
David:I hired someone for the blog, who has been just the light of my life. Her name is Charisma. And she came, she was formerly a managing editor at a company called Food Beast. She was my first, like real hire and so she built an actual editorial program for us and just has crushed it for us and that’s why we have such good content these days.
And then I hired people beyond her, but that was like one big kind of step forward and created a new products beyond that. So I actually ended up doing a few more deals with Nikki where she, I actually bought a finished cookbook from her. I didn’t do the licensing. We just bought it outright. We did a few others that she created for us. We had another cookbook fall into our lap that someone was like, “Hey, I made this cookbook about bone broths. I don’t have anything to do with it. You want to sell it.” And I was like, yes.
And then we’ve created our own stuff since then our biggest win in the products space being our two free plus shipping cookbooks. One with a guy named Pete Servold, the Chef Pete, and another with Kelsey Ale. And so I would say like, aside from, you know, general business building stuff, so like building on the blog, coming up with new products, building an operational team, the free plus shipping books and then the paid advertising that we’ve done into after that . . .
Andrew:Why free plus shipping because you then tell me how that stuff works. I that this is an amateur question.
David:But no, it’s not, it’s not. And I really appreciate the opportunity to explain it because I think some people hear free plus shipping. They’re like, that’s a scam. I did want to very quickly explained some logic. So the first, basically if we sold that cookbook “Paleo Sweets” or “Paleo Eats” for 10 bucks, straight up, the psychological reaction to that is why is this cookbook so cheap? And like it’s a sale.
Now if we take that same price, which we do, well actually it’s cheaper for affiliates, but for our paid media it’s a 9.95 for shipping for “Paleo Sweets.” And that covers our actual entire cost of goods and our ad costs and stuff and then we have upsells after that. But basically like, it’s a thing where you say it’s a free book plus shipping, even if it’s the same exact price that they pay normally for whatever reason it gets through people’s mental [inaudible 01:02:25]
Andrew:You guys aren’t making money on that. You are?
David:Yeah. Basically, the way the model works is on the front end, we have, let’s just say we’ll do it for paid media specifically. We have our 9.95 free plus shipping. So our cost of goods on that is about $3.85 to get the book printed, shipped and fulfilled or printed, fulfilled and ship, that’s the correct order of operations. And then after they purchased that, so and let’s say, like for one of our agencies we’re getting a CPA of about $14.50. So all in that puts us at about, let’s just say $18 of what we have to make up for. So that at first purchase gets us 9.95 closer. And then we’ve got another, you know, eight-ish bucks that we have to make up for on the backend.
So we have four upsells. So we’re very aggressive direct response marketers. I’m want to get that out there. They’re all one click upsells. So it’s, you check out with a “Paleo Sweets,” you’re enter your payment information, click submit, you’re taken to a page that says, hey, thanks so much for investing in “Paleo Sweets” because you took us up on our offer today. We’ve got another special offer for you. And that is a Paleo recipe collection, which for some reason is our bestselling up sale by far, but it’s like super random. It’s muffin recipes, dinner recipes, and chicken recipes. It couldn’t be more random, very random. And what’s it called? That’s the first upsell, 29.95 and that adds an average of six to seven bucks to the average order value. And then each upsell after that adds a few more bucks.
So upsell two is usually in the 1:50 to 2:50 range. And then upsell three and four are about 50 cents added on there and then you’ve got our customer autoresponder sequence, which it’s really hard to calculate like the per customer thing because of how the timing works. But that usually adds another, I don’t know, 50 cents to a dollar per customer to.
So all in, we end up being profitable by the end of it. And with our Facebook ads on average these days, we make maybe like a $1 to $2 per customer profit on day zero, which is like super amazing where I’m stoked about that. I’m happy to make any money on day zero truthfully. But yeah, that’s kind of how the economics work.
Andrew:And then you’ve got them on your list and overtime they buy more and they contribute more to the forum which is no longer a Stack Exchange forum. You shifted to something else.
Andrew:Okay. What did you guys shift to?
David:That was the really fun part. Another one of those like tech things that I’ve dealt with historically. I got all sorts to epic stories of me getting crushed my tech companies. Basically, it’s still as you mentioned Stack Exchange, Joel woke up one day and was like, hey, so if you’re going to keep using our platform, we need to own the intellectual property of your website. And we were like, no, that doesn’t sound like a good idea for us at all.
Andrew:Basically what he said was I’m going to roll it into my collection of Stack Exchange sites. I’m not. Yeah, that’s not what you want to do.
David:I’m not going to just give this thing to you. Doesn’t make any sense. So we had to migrate. We had like a deadline. They’re very flexible. They’d let us take our time, but we migrated to AnswerHub, which was a $36,000 a year platform that, I really, I hope it’s come a long way since we used it, but it came with its own set of issues and then we after almost a year on that, we went off of it and built our own custom one which came with its own set of a . . . hang on. I see it doing the crackling thing. It came with its own set of issues. And so now it’s on a fully customized one, but we don’t really so much anymore because there’s just so many other priorities in the business now.
Andrew:So you don’t do what anymore?
David:I haven’t tried to customize the forum software as much in the past two years probably because we have so many other bigger needs in the business and bigger profit opportunities. Also, the fact that we built it on this custom thing has kind of limited our ability to just like . . . it’s one of those things where I can take a dollar and I can put it in there and get $0 back or I can take that same dollar and put it in any other part of the business and at least get something back out of it so it ends up getting on the back burner a lot.
Andrew:Yeah. You know what, it seems like that happened for almost everyone. If you go back and listen to my interview with Jason Calacanis, when he launched question answer on his site. He had it figured out. He told me he went all the way to Korea, he understood how this question and answer thing worked and it still didn’t take off and frankly it’s not his fault. It’s no one’s fault. There’s something about this question and answer thing that doesn’t produce. It’s not what I thought it would be. I thought this was perfect. I hate forums where people can just write anything and when you ask a question, people say go search for it first, but the search sucks. Right? Versus question and answer where people get points for answering.
David:Yeah. Very Reddit-like, yeah. Yeah. I don’t know I think we hurt our user-ship when we switched platforms a few times. And then it just, again, there was more profit opportunities elsewhere.
Andrew:So, you were little anxious when we started. How does it feel now?
David:I feel great, man. You’re an excellent interviewer, I have to say.
Andrew:Thank you. It’s not like we gave you a softball question after softball question, right? So I’m not saying he’s anxious. I want to make sure he’s okay. I want him to treat them like a guest in my house. No. And so I feel like we fully got an understanding of who you are, the anxiety, the childhood stuff, which most people I don’t feel uncomfortable talking about, but I think it gives people a sense of who you are and want to care about you. Otherwise you come across as an info marketer. And second, we also understood some of the info marketing stuff, the math behind it. All right. I feel very good about this interview. I’m glad that you do to.
David:Yeah. I will tell you this, is that I’m like looking at the clock and I’m like, “Oh man, I have something at 6,” but I could talk to you for like hours and hours.
Andrew:Ditto. I’m running 20 minutes behind. But I really enjoyed this conversation. Good. And Cameron Harold [SP] told me at Powder Mountain, he goes, you’re very scary guy. “It’s good. At least the people can see the video because then they see you’re smiling so that you’re not being aggressive.” I’m not, I just want to learn as much as possible. And I want my audience to learn. I want them to come back and say, “dude, I heard this interview with David. It was so fricking useful.” That’s what I want. So if you listen to this, please let David know. Let me know. You’ve got my email address, you’ve got my phone number, you’ve got my, you people even have my address.
Some people show up here because they’re in San Francisco and they give the address out, which I’m fine with. It’s 201 Mission Street. Let us know if you like it. And if you’re at, Baby Bathwater, go talk to Lovitch. I feel like he is just kind of chill in the background and these days people don’t realize he’s one of the founders of Baby Bathwater, but he’s a good guy.
David:They’re great. They’re literally three blocks from my house actually. They have a sign on Pearl Street now that says Baby Bathwater, which is hilarious. It’s amazing.
Andrew:They love that. They love it. They love it. Every time I tell my wife I’m going to Baby Bathwater, she gives me this weirdo look like, what is this thing? They love that whole thing. It’s a good event. I’m really happy to have gone there. I’m glad that I got to have you on here.
Anyone who wants to go check you out should go Paleo . . . paleohacks.com obviously for the site. Is there another place where they can go connect with you?
David:Not currently. Just Facebook really. [inaudible 01:09:36] personal website or anything.
Andrew:You guys can hunt them down or just frankly go to a Baby Bathwater event and go see him there. I get no payment for talking to Baby Bathwater. Though they were a sponsor at one point. I just had a really good event and I’m coming off that high. And the two sponsors, the ones who are paying me to talk about them or hostgator.com/mixergy and toptal.com/mixergy. David, thanks so much for doing this.
David:Thanks for having me, man. I appreciate it.
Andrew:And I’d love to talk again in person. Thanks.
Andrew:Bye. Bye everyone.