Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses.
If you’ve been listening to me for some time, you know that I’m a little high on this event called Baby Bathwater, where you get this—this is all I want from conferences. I don’t need more fancy presentations with better keynote slides and beautiful backdrops. I think those are great. I don’t need more of those.
What I want is what I used to have when people who were amazing entrepreneurs would come to my office and have scotch with me for like an hour or two or when they’d come to my house for dinner and we’d get into it a little bit. I want someone to organize that for me and to have it go on for a few days so we can get in depth. I want someone who—I hate to say this in an intro—but someone who gives a fuck about me and I respect their opinion to just spend some time thinking through what I’m doing, to talk to them about what they’re up to, to really have this kind of conversation.
Anyway, this thing Baby Bathwater, I try not to go to a lot of events. They’ve done it for years. I’m fascinated by it. So I’m going to go to the event. Like everyone else who’s going to the event, I had to talk to the freaking founders. They will not let you just buy a goddamn ticket and go to the goddamn event. So I talked to the founder—I knew one of them and I got to know the other one—and I said, “Hey, what did you do, by the way, before?”
And I just kind of tossed it out. The call was supposed to be about me, but I just wanted to find out about who this guy was. He told me about how he used to sell this nutrition health stuff online. I go, “How much money did you make with that thing?” I’m always fascinated by those nutrition sites, aren’t you? It turns out there was good money in it. “You’ve got to tell me more.” He starts telling me more.
I go, “You’ve got to stop. You’ve got to tell me more in a Mixergy interview. Would you do it?” He goes, “Yeah, I’ll do it. I’ll come out and talk. I’m kind of an open book, but I don’t want to be a jerk to anyone who I work with.” I go, “Great. I won’t make you into a jerk to anyone else, but tell me how this whole nutrition business works.” So here he is. The founder of—it’s not Baby Bathwater. Baby Bathwater is, I guess, the event. It’s called the Baby Bathwater Institute. They had to take this like funny sounding name and add the word Institute to it because that’s what these guys are about.
Andrew: Before that, Michael Lovitch, the founder of Baby Bathwater—Institute, excuse me—was the cofounder of RealDose Nutrition, which makes a line of doctor-formulated natural products supporting weight loss and anti-aging. Actually, I don’t even know if they make it. They offer it. We’ll find out whether they made it or not. I want to find out the whole story behind how that business was built and what’s going on behind the scenes there.
And this whole interview is sponsored by two companies that Michael specifically—he didn’t like some of the other sponsors that I had on my list—I always check in with my guests to see what’s okay, what’s not. He’s specifically curious about Toptal and Bench, might ask me some questions about them. So that’s who sponsored this interview. I pulled those two sponsors to talk about. I’ll tell you more about those later, Michael and the audience. First, Michael, welcome.
Michael: Thank you. I’m glad to be here.
Andrew: Dude, how much money did you make at your height before you left RealDose Nutrition? Give me a sense of the kind of revenue these businesses make.
Michael: The peak of that company was—
Andrew: How much?
Michael: Over $4 million a month.
Andrew: Over $4 million a month in sales?
Andrew: What’s a typical product you guys sold there?
Michael: We sold very few. We sold kind of—we make products for intelligent New York Times readers. We targeted women over 50. The flagship product was a weight loss pill that would help people who—let’s say you’re a woman and you’re following—or even a guy and you’re doing everything right, negative calories, whatever, you’re still gaining. There’s hormonal blocks. So we created a formula which helped remove the hormonal blocks to weight loss when you’re doing things right.
It’s truly frustrating when they’re all exercising and they’re doing everything right and they’re still gaining weight. We removed the blocks to those hormones that were getting in the way of that. We were not like a weight loss pill like with stimulants or a claim that you could eat what you wanted and lose weight, no bullshit, none of that. We made it so if you were doing the right things, you were more likely to lose weight than before trying the products.
Andrew: And it was all sold online?
Michael: Yeah. We had doctors resell it. What would happen is doctors would reach out and they could sell it in their offices, but they were not allowed to sell it online and compete.
Andrew: Because you guys sold it online. They got to sell it in their offices. I’ve got to ask you this. Isn’t that snake oil? You’re basically selling pills that make people feel good and you auto-renew it and the whole thing.
Michael: First of all, we never auto-renew until they try the product, which is—I want to talk about that because it’s the biggest scam going. Yeah, I think most supplements are snake oil and unnecessary, but they were—
Andrew: Were you snake oil, though?
Michael: What’s that?
Andrew: Were you guys snake oil? Were you guys just basically selling fiber in a packet?
Michael: I think we were the opposite of snake oil.
Andrew: You were the opposite?
Michael: Yeah. We would only put ingredients into our product that had double-blind human studies at the dose used in the study—nobody does that—and we made sure we got the ingredient from the exact same sources used in the research. So our brand promise, which is exactly the FDA rules, by the way—so you’re supposed to have all that, but nobody does—and our brand promise was the FDA guidelines, which gave us a lot of advantages and it let us sleep at night.
Andrew: I thought all these guys basically resold the same exact thing, different label, that way they could get around the whole FDA thing and then they each had better marketing than the other and that’s what separated them.
Michael: One is if you have private labels, it doesn’t get you over any guidelines. So that’s not true. They can private label, but they’re still in jeopardy. So, there’s the FDA. The FTC is who companies really have to worry about, not the FDA. The FDA is kind of the guidelines, FTC enforces. So, if you have problems with the FTC, that’s when you hear about people completely losing everything they have. That’s when you mismarket.
Some companies formulate their own things. I put us in that category. Some people private label crap. But no, you can formulate what you want. Luckily, like when we started, it’s a pretty mature business, so like in the 70s, it was kind of like where the pot industry is now. People are making shit in their bathtubs, there’s no regulations. At this time, even when we started, there’s ingredient suppliers—what the game is, let’s say you take ashwagandha, that’s an herb, right? It has certain properties.
Andrew: I don’t want to get too deep into that. That’s the part where I don’t follow, but I get it. You’re saying this industry is full of people selling snake oil. We wanted to become the guys who were selling something that was really meaningful and because of your experience, you were able to pull that off. Did you become a millionaire from this?
Michael: Personally, yes.
Andrew: You actually got to see $1 million in your personal bank account, look at it, do the whole thing?
Michael: Yeah, and then have it taken away quickly by my wife and my dad to protect it from me, yes.
Andrew: Are you still married to your wife?
Andrew: They specifically didn’t—it’s not like you got divorced and—
Michael: I’m not to be trusted with money in my bank account.
Andrew: Really? So they put it where?
Michael: Long-term things, so when my daughter gets out of college, it’s not gone.
Andrew: Wow. Okay. All right. I’ve talked to some entrepreneurs here on Mixergy, they lost it all afterwards.
Michael: I’m horrible, horrible with money.
Andrew: What’s an example of something bad that you did with money?
Michael: First, in my background in my 20s, I was a special ed teacher, so I didn’t really have any. And then slowly but surely when I finally got a little lucky in my first company, I would take all my friends from the special ed. world and pay mortgages. I just took them out. I didn’t really understand it and I just kind of gave it away. Also, I’m kind of a lush and I like to go out and do crazy things.
Andrew: Give me an example of a crazy thing. Let me live vicariously through you.
Michael: We’re like the Beverly Hillbillies. Once we had money. . .
Andrew: What did you do? What was the crazy thing that you bought?
Michael: When I was in Fort Worth, I was like, “Hey, everybody, let’s go to the most expensive place in town. Get everything.” My friends didn’t have—
Michael: I’ll do that, then all of a sudden, it’s fucking huge and I didn’t care because I didn’t really understand—I didn’t understand taxes, all that stuff. I got in a lot of trouble.
Andrew: Oh, man. All right. I get a sense of where it is. Here’s the thing that I got from you, though. You’re like a really good guy. You strike me as a really good marketer. You have this sense of business that I don’t have because I’m a little anal. I want to bring more of the craziness of being willing to take people out for a great dinner, more of the outside the box thinking that you have. That’s why I want to go to Baby Bathwater.
Does irritate you that I keep calling it Baby Bathwater instead of Baby Bathwater Institute? No, you’re fine with that. Okay. Good. I saw you actually before we talked, I said, “I’m going to run the name Baby Bathwater by you. You gave me this look and then said, “Baby Bathwater Institute.” I said, “Oh, this is—maybe he’s taking it seriously.”
Michael: No. It’s just funny that we’ve named it that and we have plans for that. We thought it was funny.
Andrew: It’s a striking name. Everyone keeps asking me, “What the hell are you talking about, Andrew?” All right. You were a special ed. teacher and you got into it because you were in special ed. Let’s just go back a little bit in time before we get to your business to understand you.
Michael: I had a speech impediment.
Andrew: You had a speech impediment. What was your speech impediment?
Michael: It was mumbling. Nobody could understand it. I still have that. When I drink, my mouth goes way before my brain. I’ll get cut off in bars. It’s funny. [Inaudible 00:09:22] gets really mad. He’s like, “Don’t you realize he has a speech impediment?” I’m like, “No, it’s cool. They’ve got to cut me off.” I sound really fucked up.
Andrew: How’d you get passed that?
Michael: Well, I still have it, just a lot of drills like everything else.
Andrew: You’re just sitting in your car, like in the movie “Bugsy,” where Bugsy Siegel tries to talk American and not like gangster.
Michael: No, as a kid, that’s what happens. I grew up in Kansas. The trailer for the special people and the speech were the same trailer. I would go to the trailer. It was really embarrassing. So, at recess, like, “Where are you going? You’re going to the retard trailer, right?” I’d be like, “No, I have a speech problem.”
Andrew: It’s still the same trailer but, “No, for me, it’s a speech problem.” Okay.
Andrew: What did they give you, what kind of drills?
Michael: Just tongue twisters and annunciation things, repetition, repetition, repetition. Over time, I got where I can speak normal.
Andrew: Brown leather, yellow leather, that kind of thing?
Michael: Yeah, that kind of thing.
Andrew: I wish I didn’t have a cold now so that I’m not like talking to a guy who knows how to pronounce things right.
Michael: Going to pick up a [inaudible 00:10:21]. I still have to think about annunciating. There’s kind of a disconnect in my head. When you talk, you don’t think about moving your mouth. I have to think about moving my mouth.
Andrew: You do?
Michael: Yeah. I have to think about sounding clear.
Andrew: Doesn’t that get you too much in your head where you overthink what you’re going to say?
Michael: Oh yeah.
Andrew: You walk away going, “Why did I say this? Why did I say that?”
Michael: It takes away a chunk of consciousness, which sucks, So I have to be aware of one more thing, which is kind of a pain in the butt. If I don’t think about it, you can’t really understand.
Andrew: So your friend said you’re going to the retard trailer. They put them down. You actually realized, “These are really good people.” You connected with them and as a result, what happened?
Michael: I just had an affinity. Then when I stopped having to go to the trailer and get picked on, I’d stick up for them. So it was always kind of I just understood them. They were sweet. How do you say it? The Down’s syndrome kids or those kinds of kids, their lack of self-awareness makes them sweeter. We’re all like kind of evil monkeys. Let’s face it. We’re kind of contrived. We all are. And when that’s missing, it’s really sweet. So there’s no bullshit. They’ll hug you. They’re sweeter people.
Andrew: I get it. I get in my head about that. What did you say? We’re all evil monkeys?
Michael: We’re all monkeys and we’re all political. Even if you’re a nice guy and I’m a nice guy, we still think stuff and we’re self-aware.
Andrew: Yeah. And not just negative stuff, I think stuff like should I have been clearer that they were a sponsor and that’s why we’re always talking about Baby Bathwater? Does that actually change? God damn. I do want to do the right thing, but at the same time, there’s a part of me that doesn’t want to do the right thing. If I let the bad guy out, it’s basically a form of insecurity because I think that I—
Michael: Right. We all put on faces. We all put on an identity that’s not ours because we’re self-conscious.
Andrew: So, they don’t have any of that.
Michael: There’s just weird shit humans do that’s kind of distasteful and you have less of that in that community, that’s all. It’s relaxing in a weird kind of way.
Andrew: Yeah. I still feel like I’d like to have a lot less than I even do. Let’s continue, then, with your story. You’re a special ed. teacher. Help me understand how you end up with this Hypnosis Network.
Michael: Well, it didn’t last long. That’s why I feel bad because I was—yeah, it lasted a couple years. It was frustrating. I ended up working with the autism community. We didn’t know what we were fucking doing. I really hate to be ineffective and we didn’t do a good job. I didn’t know what I was doing. We have these—although we’re in Santa Cruz, [inaudible 00:12:57] High School District south of Santa Cruz, it’s like every couple months there would be a new expert consultant come in from San Francisco or whatever with their new model or their new shit or the new miracle autism cure.
I only had an undergraduate degree. I got way more interested in what the fuck, none of it worked. They’re giving me research and the research didn’t seem to work. It didn’t make sense to me. I lasted a couple years, burnt out, too emotional, too underpaid. It was more just the emotional effect of not being able to help, not knowing what we’re doing. I still don’t think they know what they’re doing. The autism, I don’t think anyone has a solution. They’re still getting fucked over by the anti-vax community and all those whackos. They’re a really vulnerable community. It’s just sad. After a while, I just can’t deal with how sad the parents are, blah, blah, blah.
But I did get interested in how do you read this research, like what the fuck? They’re like, “Yeah, blah, blah, blah.” I was like, “This doesn’t look like the science I learned.” So, I did what everybody does when they’re kind of in mid-career, I went to grad school. I was already in California. I got in state. I went to UC Davis to study—the best bag in grad school is to study something called communication sciences because that means you can study whatever the hell you want.
Andrew: It’s all communication?
Michael: Well, I could go to the psych classes and talk to those professors. I could go to the sociology people. I could go to the media people. What the fuck is communication sciences, right? I could just get all these professors from all different departments to mess around with and learn stuff. I wanted to learn the structure of like—the first thing I came to is I wanted to learn how do you know what you know, kind of epistemology, like what’s a true statement. I was frustrated with like how do you know what’s fucking true? What are the ways of truth?
Andrew: How does this get you to a hypnosis business that does seven-figure, $1+ million?
Michael: I’m getting to it.
Michael: I really got into the literature. Because I could do anything I want, I started researching all the unconscious stuff, which is really cool. You start looking at behavioral economics. I was reading Kahneman back then. This was in the ’90s. There was behavioral economics literature. It got popular way later. That was stuff we were reading. That was stuff we were into, just how unconscious we really are. Then if you really want to go start diving into unconsciousness, you start looking at the hypnosis literature, which is real studies, real literature, not the fucking fair crap.
So I ended up doing my whole thesis on hypnosis as an everyday phenomenon. It was kind of interesting. You could flip it on its head and go, “You’re not putting me in trance. We’re always in trance.” Maybe you can break a trance. It got pretty fun. They call it in graduate school mastering out. I didn’t go on and get my doctorate. I needed to do a thesis. That was cool.
So I’m a more of a dabbler. That was in my head. I would say I know a lot about the research behind hypnosis, talked to a lot of great therapists, a lot of good researchers. It intrigued me. It was neat. I went on after grad school to take some sales jobs, was doing all that, did alright and then when I—I also was early online just as a guy searching and messing around. I had a friend who was high up in Yahoo. She kind of got me into this. I was always researching all the time, watching online, thinking this is kind of neat. That was kind of the ’90s.
We kind of watched ecommerce. I started looking at all these people selling hypnosis CDs. I was like, “You’ve got to be fucking kidding me.” They were selling stuff that according to the literature couldn’t be done. They would say, hypnosis for memory. Well, hypnosis does not improve memory. You can’t. They’ve studied that. It does not work. But then people are selling it all fucking day. And then the people selling hypnosis, they were certified clinical hypnotists, which you can get in 12 weeks.
Then I had an acquaintance who got his cat certified by these organizations. He actually published a whole article, animals are getting certified. Nobody was making—if you did a reverse search—so, that back then, it was Overture. There wasn’t even Google AdWords back then. You could do a reverse search and see how much people are spending. I’m like, “Wow, there’s lots of fucking money in this snake oil that they’re selling.” I was like, “I know real therapists.”
Andrew: I see this article, “Certified Hypnotherapist. . . Cat?”
Andrew: And that’s the post. I don’t even think it was called a blog post at the time. I see the certification. Is it four different certifications that the cat got?
Michael: Yeah. It had a follow-up. Basically, they changed the rules that it can’t be an animal. That’s all they changed. So, what a fucked up thing. I do come from an academic family. So insulting. Then when I was selling, I was selling like database encryption stuff. So I was travelling to D.C., got married and then my wife’s pregnant with Piper, my daughter. I’m like, “Okay, it’s time.”
I know some web—I was pretty connected. My ex-roommate was a webmaster. I knew how to make a webpage and have the right people. It was time. I wanted to create like a proven hypnosis company, where I set rules, just kind of like with RealDose. You had to be in practice over 20 years. You had to be a licensed psychologist.
Andrew: What they were doing was you would go to these people, you would create CDs with them and you would sell it on your site?
Michael: Yeah. I was a publisher. So I read a book on how to be a publisher. Basically, what’s the model? My sister is a lawyer and her friend drafted me up a publisher contract. Then I found a partner who could do the business side because I could never probably have a business by myself because I can’t do the business side or that part. So I’m the creative. I can’t ever be the—if I’m a person—he actually had finances to kind of help start it. He’s a real business guy, found a guy to kind of invest in the idea and be that part of the company. He’s a great guy and off to the races.
I just called up my old contacts in academia and said, “Who’s the best at this?” And there’s only two organizations that are real. There’s the APA, American Psychological Association division and then there’s the Ericksonian Association. So they only allow real psychologists with doctorates.
Andrew: So what you would do is you would publish their CDs and then you would go out and market it?
Michael: Yeah. First, I’d find the right person. I interviewed a buttload of people that was the right—like if you’re going to do diet adherence, well, I want the best person on that. If you’re going to do sports. Like the guy I got was a trained Olympian.
Andrew: Am I wrong to brush over this? To me, it feels like it’s work to get it, but I can see how you would get the right people.
Michael: That’s the most important part.
Andrew: It is the most important part. I want to talk more about the business part of it, which is to promote it. I don’t want to dismiss it, but I didn’t want to brush over it and go to the marketing. I get how you get this stuff. How do you get anyone to buy these CDs?
Michael: Well, make a good webpage. I studied—also, my background, like communication sciences, I was a sales guy and when I was a sales guy, I know how to sell shit. I know how the web works. So, unlike most people who just created a catalog page, I made a landing page for each product. I started with nine products. I got books on how to write copy, which wasn’t hard because it was like, “Wow,” they weren’t that impressive.
I was able to write persuasively. Then I had the ammunition because I had something to fight against. I know basically people were buying AdWords already. I knew what to fight against. It was pretty easy to go if somebody had the main hypnosis keyword, I could say, “Experience true hypnosis from real psychologists.” It was all about the difference.
Then the rhetorical situation was people thought hypnosis was weird and chickens and all that. I just took care of that with articles and social proof. That’s the thing about the page. You could buy traffic. I was from a channel background. If I sold my database encryption stuff, I’d sell through IBM or the channel.
Back then, there was cheap affiliate marketing, but I would just—say I had a good example, like we had one for building ego strength, like self-esteem, that kind of thing. So I’d go to all the people blogging about that and I would say, “Hey,” I just write them an email and say, “Great site,” and I’d actually read their site and say, “I have something that might or might not be help for your people. Here’s what it is. Do you want to review it?”
Anybody who had a list or had a following, I’d ask if they wanted to review that CD. I’d follow up. I had an Excel sheet that I’d follow up kind of strategy. So instead of saying, “Hey, promote my shit, you’ll make all this money,” I’d ask if they wanted to review, give them a real reason and follow up to see if they had. If they liked it, I’d say, “Do you mind sharing exactly what you told me with your audience about a way if you want I can give you a 25% commission?” That’s how I built that side of it, one by one by one by one was kind of a really elegant affiliate recruiting status.
Andrew: You didn’t do anything like the Yanik Silver Network, where you’d go out to them and they’d help promote it or any of that?
Michael: I went to a Yanik show and I actually met somebody, but no. I would email. Then I started going—once I could afford events, I would go to events and meet people. Then our big kind of breakthrough—we had a product that helped people follow their fucking diets. No miracles.
Andrew: Yeah. It looks like the diet one is the most popular one. It’s Breakthrough Weight Loss Hypnosis Program, works for nine out of ten people.
Michael: Yeah. We had a study. For nine out of ten people, it helped them follow their diet. So, we weren’t like, “Here’s your diet. Lose weight in your sleep.” It was really fucking typical. If you were given a diet by whatever, the book you read, your doctor, whatever, it would help you follow it. If you were given an exercise plan, it would help you follow it. That’s all it did.
Andrew: It was affiliate programs that helped you get the most sales?
Michael: Yeah. Then what happened is like that, like Joe Mercola had probably the biggest list ever and he started giving it to people in his clinic. He had the biggest list ever. He started this every Tuesday promoting it, getting a commission. Dr. Mark Hyman, famous doctor, Dr. Amen, all these bestselling doctors who they realized that if they would sell my program, their program would work better. So, we were like an adjunct. So it got to the point anybody selling fitness products or doctors with their diets or whatever, we just made sense on the back end.
Andrew: To this day, this seems to happen, like Newsmax is one of the big traffic sources for it, right? You’re smiling. You know that.
Michael: Newsmax isn’t a traffic source for us. No way.
Andrew: It is, isn’t it? Oh, you know what? It’s for RealDose Nutrition Newsmax is big.
Michael: That would be an ad that we probably ran years ago.
Andrew: Probably, yes. It’s still up.
Michael: It’s an ad running on Newsmax? That’s probably an ad on display. So that’s called media buying. That’s very different. We can talk about how that works.
Andrew: I see. You know where I’m getting this stuff? SimilarWeb, my go-to source for stuff like this. For top display advertising, LoseWeightByEating.com. This is for RealDose Nutrition. And then for—let’s go to the Hypnosis Network. There’s not much going on there right now.
Michael: We were affiliate-based. RealDose is a media buying company. Hypnosis Network primarily got our traffic—
Andrew: Hypnosis Network was more about affiliate programs. All right. Let me take a moment to talk about my sponsor, then I’ve got to come back and say I searched for something you told our producer. I can’t find it to validate it and we’ve got to talk about that. First, you were curious about—who do you want me to talk about first, the bookkeeping company or the hire a developer company?
Andrew: Toptal. All right. What are you curious about with Toptal? Top as in top of your head, tal as in talent.
Michael: For everybody in my group, one of the biggest struggles is finding creative talent that actually understands marketing. So, how do you find those people? We have recruiters, but the main thing people who do very well complain about is creative talent.
Andrew: And you want a developer who could do that?
Michael: No. That’s the thing, not developers—writers, designers, also designers who are in commercial optimization who actually understand marketing. So, you have your artist fuckers who make things pretty, but then you also want people who know how to design for conversion and it’s like finding a fucking unicorn. If there is a service that vetted that and actually had people who knew how to convert and design and be creative and maybe make video clips that are slightly above par and that actually tell a story to sell something, that would be sweet. I wonder if Toptal did that.
Andrew: So you’re right. Most people go to Toptal because they want to hire developers, but they do have this whole design arm and these guys at Toptal are really good at improving their conversions. One of the things that strikes me whenever I go to their site is if I’m brand new, like looking at it in an incognito window and I try to exit, they have an exit intent pop up and they’ve had it for years, but it doesn’t feel like one of these marketing exit intent pop-ups. These guys know how to design for conversion, but not make it look like they’re online marketers. I’m talking about the people at Toptal.
So can you hire a designer from them who is able to think about conversions? I think yes. But I’ll tell you what I would do if I were you. I would go to Toptal and I would say, “I want to talk to one of your people. I’m not looking to hire this guy from a website. I want to talk to someone on your team to tell them all the things I have in mind for increasing conversion, all the design type of work that I have,” and then challenge them to go out and find people.
If they find you two people who are jerk-offs—this is not what I should be saying in their ad—then you get a sense, “They’re not really getting what I’m looking for.” If they find two people who are really good, you can hire one of those two people and often get started with them right away. I’m looking at their website. They do have UX designers and I do believe that they have designers who can help increase conversions. I think that’s something that designers need to think more and more about, design for conversion. So, what I tell people—
Michael: It’s what’s missing.
Andrew: What I tell people is if you’re interested, go call up Toptal. The number one complaint I get from people who have called up Toptal is, “Toptal will not work with me.” I think that’s positive. I get it.
I’m always very sympathetic with people who email me and say that, but I think that’s positive because what they’re doing is they’re saying, “Talk to us before you hire our people. Tell us what you’re looking for, the quirks or the way you work, the kind of stuff you wouldn’t feel comfortable putting on a website that you may not be aware you’re looking for. We’ll go back to our network. We’ll find the right person for you. We’ll match you up with. . .”
Let’s say what they do is two or three people. If you want to hire them, you could hire them and get started, if not, you just pass and you move on. They’re not going to waste your time. But frankly, in many cases, what they say, “You know, Michael, what you’re looking for is not what we can do. We’re sorry.”
I’ve never even heard them refer us to something else. They just say openly, “This is not something we can solve.” They tell you that openly. Where it comes up often is people want to hire developers from them and they have no one to look at code. No one to talk intelligently to the developer and they say, “Sorry, we’re not going to work with you.” If you just are looking for a developer and you don’t know how to work with them, it’s not the right place.”
All right. Anyone who’s interested can go to this special URL. That includes you, Michael. If you like, I can make an introduction to my guy over there. Go to Toptal.com/Mixergy, where you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours. I intentionally read that very fast. I don’t want people to sign up because they want 80 hours of free stuff. That’s in addition to a no-risk trial period of up to two weeks.
I intentionally read that fast because I don’t want people to sign up just for the free trial period. I do want you to sign up because they will take good care of you guys if you come from Mixergy, created by long-time Mixergy fans. Frankly, they’re just really good at what they do. Go check out Toptal.com/Mixergy. if you’re like Michael and you want an intro, email me.
Michael: Not going to lie, I do.
Andrew: Andrew@Mixergy.com. Let me do this. In 40 minutes, remind me to follow up with Michael and Toptal. Now Siri knows exactly what to do.
Andrew: I love this Siri reminder. All right. Let’s move on with the story. Here’s the thing I couldn’t find. You said that you guys were in The New York Times and so on. I did a search. I can’t find the Hypnosis Network anywhere on The New York Times according to Google. I know Google seems to be forgetting old sites.
Michael: [Inaudible 00:29:14] wrote the article because it was right around Obama in 2008, we were in New York Times there. We were in the Wall Street Journal, for sure, because that was about [inaudible 00:29:22] and his productivity program.
Andrew: How did you get into The New York Times and the Wall Street Journal and so on?
Michael: I don’t understand PR at all. New York Times—if you go to our about page of Hypnosis Network, we had all these top therapists. That page started to rank. So, some journalist called us up for a quote and then found us credible, same with Wall Street Journal. So, the journalists found us, like the about page. It was more about our therapists than us. Then we got lucky.
Andrew: So, if I search for Hypnosis Network, nothing comes up on The New York Times since 1851.
Michael: It would probably be about a program. So, search for Roberta Temes, New York Times.
Andrew: Roberta Temes. Okay.
Michael: So she was our therapist. It was about the program.
Andrew: You’re going to search too. Okay. “The Possibilities in Hypnosis: Where the Patient Has the Power,” does that sound right?
Michael: Pretty much, 2008, November 3rd.
Andrew: All right. I see it.
Michael: Yeah. It’s about the program. It wasn’t about us. I didn’t promote us.
Andrew: You’re saying they just found you because you guys were good at SEO.
Michael: No. I always [inaudible 00:30:43] SEO. We had a page that had all these great therapists and that started to rank, I think. We were shitty in all that.
Andrew: What were you good at? I don’t want to leave people with this impression that, “Hey, we Forrest Gumped our way to success and then we took that and parlayed that to the next business.” What were you good at that I can learn from you?
Michael: The biggest part is find an industry where there’s revenue. Find an industry where most of the stuff is crap and create something that differentiates itself in a very vivid way and then say it. To me, it’s always been about the brand is solving a problem. Like my sensibilities, I do have more of a—I’m a Jew boy raised by academics. If I can go to an industry and go, “Wow, there’s a lot of people like me. I’m a liberal, kind of into science stuff. I bet if I think this, then other people find it to be pretty fucked up too,” then see there’s traffic, see there’s money being spent. Hypnosis was a smaller market, but people were spending money on pay per click.
Then create something with the exact opposite of what’s being out there. So ours was everything that wasn’t. The first thing is what are you creating? Create something that’s opposite of what’s in the market if you sense a gap. So what is fucking missing here or what is wrong and then solve it. That’s the first part. I think that’s the most important part. You can market all fucking day long and make money for half a year or a year. But if you have crap or nothing that stands for anything, you’re not going to last long.
So I’m not a marketer. I’m a guy who finds holes and creates products that I want to see or stops something like slimy and then market that. It’s a lot easier to market something with a physician behind it. Does that make sense? It works. Then on the marketing on the—what anybody can still do—there’s people who market through media buying, although RealDose, we started with partners to fund us. But if you want to do the relationship style marketing, it’s about contacting people in the right way. But if you don’t have something to deliver that they can review that’s good, that’s not going to work.
Andrew: I do see a lot of reviews. I’m wondering at the time, they didn’t even have to disclose it. They were getting paid for the reviews, right?
Michael: They’re affiliates.
Andrew: They didn’t even have to disclose that they had affiliate programs. That was a big thing.
Michael: Nobody does now even though they’re supposed to.
Andrew: I know. One of the reasons why the beginning of the interviews, I always say I’ll talk about my sponsors later is I get really worried that I’m going to violate the rule of talking about a company and not being clear that they’re a sponsor.
Andrew: At the time, there was no rule to do that. I can see even some of these people are even just linking over without—as far as I can tell, they’re not even hyperlinking using an affiliate code. They’re just linking over. Some are, some are not. The New York Times article is featured a couple times, where people say, “They’re even featured in The New York Times. Here are the pros, here are the cons, go sign up.”
Michael: Yeah, or go buy the program.
Andrew: This thing was going well. At its height, how much money were you making?
Michael: Like $7 million a year-ish.
Andrew: Did you pull more than $1 million in profit from that?
Michael: I did not. No.
Andrew: Why? Where did the money go there?
Michael: I didn’t know what I was doing. We spent a lot of stupid money and a lot of it’s still tied up in the company.
Andrew: Stupid money doing what?
Andrew: Stupid money doing what, taking people out?
Michael: Some of that and also it was hiring really bad consultants. So that’s one of the reason we had Baby Bathwater is I got taken quite a few times.
Andrew: What’s an example of a bad consulting experience that you had?
Michael: I want to be careful. I’d hire lots of people who would—
Andrew: Don’t mention the name, but what’s a type of job that you felt would—
Michael: Investing a lot of money on bad media buys because I didn’t know media buying at the time or throw $100,000 at this or this guy is an amazing copywriter, he’ll blow up the business and they take huge fees, stupid shit like that.
Andrew: Right. Why do you think it was bad? Were they bad or were you bad at managing them or what?
Michael: Both. They’re not con artists, but also not vetting them. If you’re not a somebody, they take—you’re just kind of the prey.
Andrew: I’ve noticed that. If you’re not a somebody, if they don’t know who you are, they make money off of you or they make reputation off of you. If you’re not a someone, they can’t make a reputation off of you, so they try to make money off of you. That’s the issue. That’s why having a profile helps.
Michael: Yes. So, yeah, that was very vulnerable and I believed a lot of stuff and I was trying to hit it out of the park and then that faded away, that company. I lost my motivation and just kind of left. I own a lot of that company, but I haven’t worked in it forever, let my partner take it.
Andrew: When you say lost your motivation, what do you mean? You started sleeping in more, hanging out more, what?
Michael: Yeah. I just couldn’t do it anymore. I’ve never been a good team builder. So, I was the creative. We had a lot of programs. So I wrote all that copy and then I wrote all the emails and wrote all the articles, like every fucking thing. The world doesn’t sit still. You might have something that’s doing well right now. You’re looking at archives from 2004. So shit doesn’t work anymore.
So you’ve always got to evolve. I was never able to hire somebody who could market or write like I could because I didn’t know how. I was just burnt out. I couldn’t do it anymore. Also, I realized about myself, I didn’t know it at the time, I’m a starter and I do things to prove a point. The building the empire thing is not interesting to me. So I’m not a natural empire builder. It’s not what I’m about. I don’t like building companies. I like starting them. It’s not what I do well. I’m not a leader of men. So all that stuff that it takes to kind of run—
Andrew: I know. There’s some people who I’m fascinated by who don’t run it day to day. They find the right people and the people deal with it.
Michael: It’s incredible.
Andrew: Yeah. You know who’s good like that? Speaking in the marketing world, Neil Patel, Syed Balkhi he’s the guy who runs OptinMonster and a bunch of other software.
Andrew: You know him?
Michael: No. I just know the company.
Andrew: He’s fan-freaking-tastic at running all these different companies, but he has somebody who runs it for him, like will partner up with him. He’s always guiding but also easing off.
Michael: How do you find those people? I’ve never done it. It’s magic to me.
Andrew: So Cameron Harold is a guy who used to be a COO, went to your event. Part of the reason I’m excited about Baby Bathwater is he has no reason to say anything nice to say about anyone, but he had a good time at your event and he said this is the kind of event that he goes to.
Michael: I watched his [inaudible 00:37:24].
Andrew: He offered to help me out to think about this because that’s a big challenge for me too. I want to do the work. I want to hard-charge through everything. Who the hell wants to deal with a guy who wants to do your work better than you can and wants to drive you to the ground because they’re driving themselves to the ground? Nobody.
Michael: Yeah. I’m a terrible—that’s while I’ll always need partners. I’m not really allowed to talk. I’m not a good boss.
Andrew: You don’t even seem like hard-driving like me. I will work to the end of the day until I’m so ready to pass out, I’ll do nothing but read Daring Fireball and try to like get myself relaxed.
Michael: I’ve talked to people who are smart about it and it does not seem to translate. I don’t know if it’s a personality flaw I can’t get over. I’ve talked to people who are experts and I’ve tried to get training. It’s still not my nature of being to run the show.
Andrew: And it seems like you’ve come to a point in your life where you’re just accepting. This is not you. That’s not what you want to be and you don’t need to be that.
Andrew: Okay. So, you started to—
Michael: I don’t like thinking for my daughter. I don’t like thinking for other people.
Andrew: Even for your daughter, you don’t.
Michael: I’m not a chess player.
Andrew: Okay. So you built up this business. It’s doing well. You start to—I’m going to use the word flake out on it. You’re okay with that, alright? You start to flake out on the business. Suddenly you ease yourself out of it because you’re not doing very well and then you start to look at the pill business. And you’re looking at it and your blood starts to rise. Am I being into your PR story or is this really what happened?
Michael: Well, because all the doctors who are selling weight loss promoted our stuff, all of a sudden, I have a weight loss [inaudible 00:38:57], huge one. If you look at me, I’m not really that interested in weight loss. So, anyway, but I have this thing. Then all these supplement companies would always hit me up in the wrong way. Instead of like, “I’ve got this thing, you want to review it?” You’ll be like, “Hey, man, promote this pill,” you’ll make it the wrong with one, the slimy fuckers. I know enough about science—my mom has a doctorate in physiology. I run it by her like, “Does any of this shit work, man?” She’s like, “You’ve got to be fucking kidding me.”
Andrew: You take the pills to your mom and you say, “Mom, could this even work?”
Michael: Not the pills, people would ask me to promote their shit and I’d send them to the website and the ingredients. I know how to read shit. I can read literature.
Andrew: Your mom is a doctor?
Michael: Doctorate in physiology.
Andrew: Doctorate in physiology. But physiology doesn’t let her understand what’s in a pill.
Michael: She can read research. It’s all about can you—you get those degrees so you can read journals.
Andrew: Okay. She’s going to read the research and say, “This is BS.” Why don’t you say, “Hey, this is all just BS. I’ve got to move on from this whole world. Why do I need to be associated?” Why don’t you have that thought as opposed to, “I can get in there and I can do my own thing.”
Michael: No. Then you want to find out is there something that could work?
Andrew: Is it that or is it, “I want to make more money? I want to start again.”
Michael: Probably both.
Andrew: All right. Fair enough. Let me take a moment to talk about my second sponsor, speaking of money. This is a company you didn’t want to hear from first, but I think you’re going to love. Who does your books? I always ask entrepreneurs this. Who does your books?
Michael: We have a friend that runs a virtual CFO company.
Andrew: Oh, really? What’s the name of the friend.
Michael: They’re amazing. AVL Growth Partners.
Andrew: AVL Growth Partners?
Michael: Yeah, in Boulder. There’s no natural food company that doesn’t have them. They do all your financial strategy, like real shit, giant clients.
Andrew: Why don’t I know them? Full stack CFO firm and they will even do your books on a monthly basis?
Michael: Yeah. They have different prices. They gave us our strategy. Again, we’re terrible with money. John Rose is the guy there. He’s like, “No, you guys need to do accounting this way because you’re an event company.” Okay. And then we’ll do it. So, he found us Mindy and she does our books. So, we just trust him with anything because Hollis and I, you met Hollis, neither of us are the people, again, to be trusted.
Andrew: Yeah, Hollis seems—your cofounder at Baby Bathwater—he seems like a smart guy who also does not want to bother with the bullshit of life and the bullshit of life is doing books.
Michael: Yeah. His dad helped—Hollis’ dad also is a big help to us.
Andrew: All right. I’m interested in this business that you have that’s doing it for you. I’m looking at their website. I’ve got to say I like it. It feels very high-end and very high-touch. What I am looking for is more of like the SaaS experience. I just want them to understand my business and do it for me and keep my books updated.
The worst part of business is where you don’t have your books and tax time comes around and you scramble at the last minute to get it all done and you know that you’re going to either get ripped off because you’re not taking care of your numbers right or you feel like a garbage business person because you’re not getting your numbers in and you can’t file your taxes properly.
Andrew: You would never play a video game without seeing the points. You would never write a blog post or tweet without seeing how many people are liking it or sharing it or reading it or any of it, right. But still, many entrepreneurs feel so guilty that they’re probably even fast-forwarding through this ad because they feel so guilty even thinking about it. You don’t have to find a friend of a friend who could do your books.
What you could do is just go to Bench. What Bench does is they have software that will suck in all your financial data into their software. We’re talking about like Stripe and your bank information, the whole thing. Software will organize the hell out of it and then a human being, a real bookkeeper will go in and make sure that it’s organized properly, make sure the numbers are tagged and categorized properly so they can give you a report on a month to month basis.
So, now, for much lower prices than you’d pay for a bookkeeper, you have your books done for you almost automatically, but let’s imagine automatic with a team behind it that gets things done and now you’re starting to see what we’re talking about.
If you’re out there and you want to try this, here’s something that bookkeeping companies will not offer you. Bench never offered this until people in the audience said, “Hey, I found a better deal from Bench away from Mixergy. What’s the deal?” Sachit, who you know, who attended your event goes back to the sponsor going, “What the hell? Our audience is telling us they’re finding better deals when they’re Googling around. Give us the best deal possible so this never embarrasses us.
So he takes all the emails that people send us, telling us they found better prices and better offer, whatever. He sends it to them and they say, “Fine, Sachit, leave us alone. We’re going to give you guys a great deal.” The great deal is you get to start a free trial—that means they’re going to do work for you guys if you’re listening to me, to organize your books and—I can’t imagine why they would do this except that Sachit must have like really went in there really determined. And you get 20% off for the first six months that you work with Bench.
Why is it six months and why is it 20%? Because frankly, their prices are super low already. Go look at their prices by going to Bench.co/Mixergy and if you can find a human being who will do this for you and you trust them, go do it, go work with whatever agency you want. What I like about Bench is it’s not just one human being. It’s software doing it and a team of people and if any one of them gets sick or decided they want to move on with their life or decides to flake out on their work, there’s a team of other people who are there.
Go sign up at Bench.co/Mixergy and you’re going to have your books done right. By the way, one of the things that I like about it is there’s a tweet here from Jason Fried, who said, “I love the idea behind Bench. It’s not just software. It’s a person plus software that used to review what they’ve done.”
Michael: I didn’t know they had humans. That’s fucking cool.
Andrew: Software and humans. I think people don’t recognize it because my sense is for a long time, they probably were showing off the software part of it because that’s what people got excited about. But we now care about humans. All right. Bench.co/Mixergy.
All right. You’re seeing the opportunity financially here. My sense is also that maybe you saw a friend or two make money in this space and you said, “I think I can do better by doing better quality.”
Michael: I saw not friends, but people I didn’t like making money.
Andrew: Like who? Give me an example. I love this. Who?
Michael: There were so many. Like there’s—Sensa would be a good example. Remember the tastant?
Andrew: No. What is this?
Andrew: Sensa—you would put it on your tongue and it would suppress your appetite?
Michael: It was supposed to make you eat less, right?
Michael: And it was the biggest con ever. Google Sensa. It was the biggest scam ever. They acted like—
Andrew: I see. The FTC got them a big—I just searched them. The first result that came up was an FTC—
Michael: Yeah. And then you have these guys selling this oolong tea, which they said was—they named it some other name and they acted like they had more fat burning capabilities. There were guys doing that.
Andrew: You know who I saw doing this? I’m almost reluctant to bring up his name, but Brad Greenspan. Every time I would go to his office in LA, he would have another company that he was running. He had this publicly traded company that just kept churning out these different businesses. If somebody was selling little remote control cars for like $10, he’d go find the guy in China who was making it, buy it for like $2 and sell it via email also. He had—one time I walked into his office, it was like an MLM business that he was creating from scratch.
Another time, he started Myspace. Basically, he funded the guys behind Myspace. Myspace was kicking off from his office. One of the businesses he had was I believe, I could be wrong, was a weight loss pill business or some kind of pill business. If I’m off on that, it might have been an anti-aging cream business. It was making money on a subscription basis and I’d go, “What the hell?” There’s huge opportunity here. But I couldn’t bring myself to get into it. You could because you thought you could do it better.
Michael: Yeah. I thought I had something real.
Andrew: Better than Sensa? Sensa was like a hit before the FTC.
Michael: Right. It was crap. I knew it was crap before the FTC and the way they deceptively marketed.
Andrew: Why didn’t you say, “Hey, you know what? People don’t know what’s in this. Sensa and all these other guys, maybe they’re doing better. How am I going to compete with all these guys by telling my customers read the fine print and go do the research?”
Michael: No. You take the thing that’s missing, which is the research and ingredients and put it front and center and educate. We started off with like a 35-minute video, bought traffic to it explaining one, the hormonal thing and explaining each ingredient and showing everybody the research, real fucking simple. It’s called edutainment. You have to educate. There are smart people. Are you going to be a $1 billion company? Probably not. But there’s enough smart people who want good stuff.
You see now, I think the supplement world now is a better world now than when we entered it. A lot of people are doing better things now than they were before. There’s always been good brands. It’s not like everybody is bad. There’s lots of different ways. Look at New Chapter. What did they sell for? Like $1 billion. I like them. They’re the opposite of us. So, it’s not a science company. They’re like, “It’s full spectrum. Let’s use all-natural stuff.” I respect the hell out of that company. It’s the opposite branding of our company. They’re legit. They’re making real stuff. I think it was Proctor & Gamble that acquired them. They’re not full of shit.
Andrew: I’ve never heard of New Chapter. I’m Googling this as you’re telling me. They are a company that sells supplements, discover New Chapter Difference—most popular products, bone strengthening, take care slim tablets, another thing that’s popular is every woman’s one daily multivitamin. At least that’s according to your website. You’re saying, “I saw an opportunity here. I decided I was going to jump on it.”
Michael: There are other high quality companies for different reasons.
Michael: So, the all-natural ones—
Andrew: You mentioned we. Who’s we? It’s you and who else?
Michael: Who’s legit?
Andrew: No. Who else was running this business with you, RealDose Nutrition?
Michael: A guy named Buck, who had a supplement company before that I wasn’t a fan of, but he knew—at the time, I didn’t know where to get stuff made.
Andrew: He knew how to make it?
Michael: Yeah, he knew that world.
Andrew: You knew how to sell it.
Michael: I was the brand positioner. Yeah. I would sell too. Then Steve is a doctor. He went to Baylor and UCLA. He’s a real doc. He could do the medical stuff. He actually ran all the finances because he actually has a better business background than us. So, we’ve got an ops/medical advisor, which is great. He’s really good at it.
Andrew: Who is this person, the other person?
Michael: Steve, Dr. Steve.
Andrew: I see it. On the homepage, Dr. Steve Sisskind?
Michael: He’s a mensch. He’s a good man.
Andrew: Chief Medical Officer—he was right on the homepage right from the beginning. I’m looking at the Internet Archive.
Michael: Funny story—we formulated it and we had the pills and the argument. I was looking for doctors to review it. I knew we wanted the doctor involved in some sort. I thought maybe somebody would get involved, give us a testimonial, be an advisor of sorts. I gave it to Steve, he liked it, gave it to some friends and started researching it. HE wanted an opportunity. He said, “How much to be part of the company?” So, he actually invested in us to take over a third of the company. Then we were like, “What can you do besides be a doctor?” He said, “I actually have a background—I can run companies.”
Andrew: “I could run companies?”
Michael: Yeah. He actually was CEO of the Franklin Mint. So he was a doctor—
Andrew: He was the CEO of the Franklin Mint?
Michael: Yeah, he had built big shit.
Andrew: I had no idea. The Franklin Mint used to—as an entrepreneurial kid, they used to get my imagination because they would sell these coins that weren’t real US coins, but they were commemorative. They would—you don’t need the President’s permission to put them on a coin and commemorate the fact that he just got an office again, right?
Michael: I think he owned some of it. So he had a background.
Michael: So he’s a business guy and a doctor. He loved the thing. It’s kind of a nice combination of us three. We just came out and we had, again, all these friends. I had a bunch of weight loss fans. We bankrolled the company with affiliates and then quickly moved to media buying.
Andrew: How’d you find affiliates? Same affiliate network as before?
Michael: Right. I already had all the affiliates. But I didn’t want to create that—one thing that I had to—the grind of affiliates has been you end up with fake relationships. After a while, that became very taxing. That was probably the biggest reason I burned out. These relationships I had with people promoting us all the time, a lot of them weren’t really real. It gets really fucking tiring and then you’re going to these masterminds. You’re going to this. You’re going to that. They’re making you all this money. I’m not going to say I hate everybody, but after a while, it got real fucking old not being able to choose my friends and having these people to—
Andrew: How does this whole affiliate world work? I don’t know it. Here’s who does know it. I got a text message from Justin Hartman, the founder of Needls, while you and I are talking. He sells software, but he somehow has a connection to the affiliate world. So, he’s selling his software—actually, what is it called, like robo ad buying or something?
It’s a funded company, fully on like mainstream Silicon Valley type company but he still understands the affiliate world. So he goes to these freaking affiliate events all the time and he gets them to sell his software and no software person is selling through them the way he does. He gets it. Tell me about how this world works. Bring it to my software audience.
Michael: Okay. One, there’s a couple different worlds in affiliate marketing. That’s where most people get fucking confused. So, there’s network affiliate networks, which is impersonal. What you’ll have then is aggregate. They’re called CPA networks. They’re aggregate exchanges.
Andrew: Like HasOffers.
Andrew: HasOffers was a software.
Michael: HasOffers was a software, no. Fucking networks.
Andrew: What’s an example of a network?
Michael: So, a network will recruit. They’ll find an offer. All the scammy supplement software shit, the free trial shit, payday loans, they all go in like, “I’ll pay $40 for a lead,” or, “I’ll pay $200 for this,” like crazy inflated prices. What they’re doing is free trial offers, rebilling it, taking money from people or edu is big on this too. They’ll pay out these big payouts and they’ll go to the network to say, “Look, the software.” And they’ll share the data.
Andrew: Is that a good source of affiliates or was it? It was not? You’d just get people who would burn through you because they didn’t know you.
Michael: I would have never used them in a million years. I know that world because I like to know everything I’m doing. That’s what I call the dark net of affiliates. That’s where most of the money is made. They recruit super affiliates. Those people are the bloggers. You know you read, “How in the world is this woman today with this fucking testimonial, how the fuck is this happening?”
They’re fucking making it up and tricking Google and tricking everybody and rotating accounts. It’s a world of criminals. They go to events like ADSUM or Affiliate Summit. That’s where all the criminals are. They make a lot of money because it’s all crap in, crap out. It’s a big fucking game. That’s one way affiliate marketing works, the networks.
Andrew: Okay. You’re saying that doesn’t work, stay away from that.
Michael: If you want to make a lot of money, if you want to scam people, great. If you have a real company, then it’s really a one by one game.
Andrew: Just go to teach individual person—that’s where you go to these masterminds. You go to the Yanik Silver event because some of the top people will be there and you network with them.
Michael: For me, no, because that wasn’t health. I’m not in that world.
Andrew: They do digital marketing.
Michael: Yeah. That wasn’t my world.
Andrew: What were some events you’d go to?
Michael: Health shows.
Andrew: Like what?
Michael: Michael Fishman’s show, CHS is great.
Andrew: You pay. You fly out to their event. You’re taking people to dinner. You’re hoping some will become affiliates. They get a share of the sales. They’re looking for products to sell that they can promote and will make more money than advertising with your site.
Michael: And what happens is most of the money is made merchant to merchant in health. So, “Oh, you’re selling a diet book? Well, I’ve got a diet pill.” Those are the better lists. So, they’re not—so, you’re each other’s affiliates. Those are called direct ventures. Those happen in the high-end health world. That’s why I had to get out of it.
Andrew: So you back to someone who has a big list because they’re selling health books and you say, “Hey, you should be selling this pill because some people who believe in your book. . .”
Michael: I’ve got a fish oil, you’ve got a bar. Let’s go, whatever. That’s why I had to get out because just after a while, it’s a grind. But that’s what the high-end people do.
Andrew: Do people come to Baby Bathwater to try to network like that to find affiliates?
Michael: We don’t allow it.
Andrew: You don’t allow it? You don’t want to be associated with that at all.
Michael: You’re not allowed to go to my event and ask somebody to promote your fucking bestseller. You’re not allowed to ask somebody to do that. You’re gone if you do that. We wanted to create a safe place.
Andrew: Okay. So, you were building these affiliate relationships at the time. That’s what helped you sell. You were finally started to get some sales coming in, millions of dollars a month.
Michael: With our affiliates, the people who were ready to launch RealDose with us because it was a good offer, I think it made people a lot of money. We did that for about four months, put a shit load of money in the bank. Here’s the problem when you try to buy media. Back then, we were doing well on Google. It takes a while to test. So, if you expect to take two grand and think you’re going to get enough traffic to really work on your offer and work on everything and make that work, good fucking luck.
So you want to get a war chest—you need to be able to lose money to figure it out. It takes awhile to get an offer working. On media, we’d assembled a fucking—we’ll call it the house’s money. You know how you go to Vegas, you get lucky? Everyone loses in Vegas, but every once in a while, you get lucky that first night, like I’ve got to put my credit cards in the fucking room and I can just gamble this away, play with house’s money, I lose but I didn’t lose. That’s the kind of way we looked at affiliate money. We had a lot of money to figure out our offer and make that work. That’s what happened.
Andrew: Once you had your offer, you said, “Forget this. We’re going to start buying ads everywhere?
Michael: Yeah. We had our offer, made money with affiliates. It’s easy with affiliates because you’re getting what’s called a warm lead. Somebody like Mark Hyman, bestselling doctor says, “You need to get this pill because it’s the best and I can prove it,” you don’t really have to have a great offer. It’s warm. When you start buying media, the cold traffic is not the same. So what works with affiliates does not work in cold media. So, people think they can—
Andrew: Oh, I still heard what I wanted to hear and not what you were saying, which is these are two different worlds. You can’t learn from one and bring it to the other.
Michael: Man, they don’t work. It’s a very different thing. If I say, “Go to Baby Bathwater,” and you’ve never heard of it and you hit this page, it’s very different from, “Andrew, go to Baby Bathwater.” It’s a very different thing. So that’s what affiliate marketing, you’re faking a warm relationship. That’s why it’s halfway deceitful. You’re alluding to it.
Andrew: But you wanted to switch away because it just was a grind to get affiliates and you wanted a more dependable way to grow.
Michael: It wasn’t a grind getting it. It was a grind keeping the relationship, especially when we didn’t like it.
Andrew: Couldn’t you just hire someone to be your affiliate manager who would just go and be the smiler?
Michael: They’d do well, but it never really works that well. They never know enough. They always moonlight. You have affiliate managers out there. I’ve never met one that was good as a founder.
Andrew: Okay. You told our producer one of the issues you had at RealDose Nutrition was you had three leaders, nobody agreed who the boss was.
Michael: Yeah. So we were bad leaders. We’re rocking it. The affiliate thing works. We hit pay dirt. We got this great media buyer. Things are going fucking great. It’s like Narnia. We were doing over a million a month really quickly and then two, bam. So we had a really quick rise. Everything is fucking great. We were all virtual. Nothing we could do was wrong. It was fucking nuts. Then when we first hit our first snafu, when things started leveling out and we had some problems with Google, it was like real company stuff, I think it was pretty clear to all of us that we were in trouble as a team.
Andrew: What was the problem with Google?
Michael: Running our ads. Anybody buying media will tell you you have to deal with the Facebook and the Google gods, the Taboola gods and the operating gods.
Andrew: Okay. This stuff comes up and now it’s a real business. You’ve got to figure this out. How did that affect you?
Michael: Well, it put a lot of pressure on us because we had it easy. Then we realized where our personalities didn’t mesh. So, we didn’t have to define roles. We were all just doing what we wanted. We were all just doing what we wanted. Everything was great, [inaudible 01:00:19]. So, as the pressure hit, our personalities did not mesh. So that’s really it. They’re good people. I think they’d say I was a good guy. I think I’m a more brash, strong personality, I think, overall. I’m more of a bully. I think I annoyed the fuck out of them and vice versa.
Andrew: When you say you were a bully, how was it? What’s an example of a bullying thing that would annoy them?
Michael: I could be snarky. If I don’t think something is right, I say it. So, outspoken could be the right word and that didn’t come across well.
Andrew: And that pissed them off and then how did they bother you? How did they irritate you?
Michael: They were more passive aggressive. So it just created some problems. I’m aware of that. I could have handled things a lot differently. Anyway, we weren’t the right team. We even had an executive coach and they did personality profiles. We hired this guy, Steven Sisler, I think is his name, pretty high-dollar guy. He gave us all personality tests and interviewed us all. We were waiting for him to offer us counseling. He goes, “I would offering you counseling, but it’s not going to work. One of you has to go.”
Andrew: One of you, not two and leave one person in charge.
Michael: Any of the two of us could work together, but not all three of us.
Andrew: I see. Okay.
Michael: Then that was kind of—I realized who I am, like I was already ready to go and stop anyway. I had a feeling we were peaking. Again, especially with media buying, you can’t sit. You might have seen your podcast, what you’re doing, if you keep doing the same thing over and over or not rebranding or not developing, you’re going to die.
So we were at the phase were either we were going to go down or we didn’t [inaudible 01:01:59] and I didn’t think we had the energy to do it, us three. We did it. Everything worked out. We didn’t have the energy as a team to redo it. It required a redo. What we were doing was no longer going to work. If I can see it, we weren’t releasing it yet.
Andrew: It has to just keep going over and over and over for the whole life of the business, you’re saying.
Michael: You’ve always got to reiterate. Life isn’t like that anymore. Sorry. You’ve got to always make things better, not just your fucking marketing. Things change. Good brands started coming up. Bulletproof came, Onnit came, some really cool brands with a more modern position came on that were actually really cool. I respect a lot of these brands. So, more fresh people came, man. The podcast thing started happening. We weren’t built for that.
What are we going to do? We never did. That’s why it sits there, in my opinion. I know we had the best product. But we would have had the superior brand. I know we have superior products, but we didn’t have the personality. So things change. I didn’t feel like doing the energy of retooling it again. You had to be way more—you had to show a lot more of yourself to make your brand work. I didn’t want to do that. I didn’t want to be that and Steve isn’t that. So, it required a rebrand and that was going to be a lot of fucking work. People with great brands came.
Andrew: I’m looking at Bulletproof. You’re right. He does keep refreshing his brand, refreshing his product offering. He now has an instant mix, Bulletproof coffee in a packet. I’m guessing you just add it to hot water. I didn’t get a change to read it. No refrigeration required.
Michael: I’m on Dave’s board of advisors. He has it. He’s a new breed.
Andrew: He’s the new what?
Michael: He’s a new breed.
Andrew: He came to your event. That’s how you know him. You’re one of his advisors. He didn’t come to your event?
Michael: I was an advisor way before he came to my event. I didn’t even invite him to my invent because I didn’t think he’d fit in. He wondered why he wasn’t invited. I said, “I think you’re going to have a hard time coming out of costume.”
Andrew: Because he’s such a performer. He can’t be himself. You want people to be themselves.
Michael: So he did. He actually did.
Andrew: He came and he was himself?
Michael: Now he’s a member and he loved it. I was helping him way before Baby Bathwater was even a thought.
Andrew: Because you’re in the same space. What did he want to learn from you?
Michael: I was out with him at dinner in New York with a bunch of other health people. I drink a lot, as some people know. He doesn’t. He [inaudible 01:04:50], getting himself in fucking trouble. I was yelling at him. I didn’t even know him hardly. I said, “You’ve got such a fucking great brand. If you stop all that, stick with the science, you have a great thing, stop doing all that.” The next morning at breakfast, we’re all at the same hotel. He’s like, “I want to talk to you.” Fuck, what did I say? He goes, “Dude, you want to be on my board of advisors? I need somebody to talk to me like that.”
So my job—I’m not responsible for strategy or anything like that, just to tell him the fucking truth, which is pretty big of him. He just wanted me to tell him my opinion, just to tell him shit like that. I’m not like the architect or any of that crap, but I’m just kind of truth teller to him and it’s worked out really well.
Andrew: Yeah. I had no idea this whole Joe Rogan thing existed. I did a search now for Bulletproof and Joe Rogan and it’s a whole bunch of Joe Rogan says Bulletproof coffee is bullshit-type articles. So what do you advise him to do in a situation like that?
Michael: Stop causing those situations. In that situation, he wanted nothing to do, but he needed to stop saying stuff.
Andrew: Stop obsessing about Joe Rogan.
Michael: He needed to be a little more careful, that’s all.
Andrew: I see. Take what Joe Rogan is saying as a warning to stop going overboard with the claims.
Michael: It’s great. It’s such good stuff. Let the truth me—it’s right there. It’s so good. Why mess with it?
Andrew: He’s got cafes opening up in places. There’s a place in Napa that makes a knockoff of his freaking coffee. There’s a place here in San Francisco that makes a knockoff of his coffee. Even the knockoffs are delicious.
Michael: He created a whole category.
Michael: Have you read the book “Play Bigger?”
Andrew: No. Never heard of it.
Michael: Come on.
Andrew: “Play Bigger?”
Michael: The best book ever, Chris Lochhead. We’re actually friends with him. Read it. But yeah, what he’s saying is—when I read it, I was like, “Wow, I’ve been lame all my life.” He’s like don’t fucking create—he goes create the fucking aisle. Play bigger. Don’t be on the aisle. Don’t be a podcast. Be fucking podcasting. That’s how you create real companies.
Once I read that—it’s funny because Hollis, my partner, he can get a hold of anybody. I read the book and I was like, “Fucking crazy.” Hollis is like, “I think I’m skiing with him next. . .” Hollis has a weird way of skiing with important people. Sure enough, he’s skiing with this guy and then we got him on. We talk to him all the time. He’s kind of our informal advice giver. That’s what we’re trying to do with our thing, fuck being this. Be the fucking aisle or go home.
Andrew: How are you guys doing it with Baby Bathwater?
Michael: Well, we already created Baby Bathwater before we read the book. So we’re—
Andrew: Is it too late then?
Michael: I don’t know. It’s a good fucking question. You know how you read something and you’re like, “Now I want to do this.” Then you’re like, “That’s neat. I don’t want to be me. I’m inspired now.”
Andrew: Let me close out RealDose Nutrition and get into Baby Bathwater for a little bit. RealDose Nutrition, I see that one of the three of you needed to walk away. It became you. How do you get cash out of a situation like that? Do you sell your shares to the other two founders?
Michael: Yeah. I don’t want to get too much into it because all that’s private. Net-net, they took 23 of my points. I don’t have to do anything, don’t take salary anymore. They found an investor in them to—I want it to be easy because it wasn’t acrimonious. So, we agreed on that price and they bought them out as they wanted. So, it wasn’t—
Andrew: You brought on an investor to buy you out and they got to buy the investor out over time?
Michael: No. They kind of with the investor agreed to buy out—
Andrew: Bought you out?
Michael: Yeah. Agreed to buy out 23 points over a time and I wasn’t a dick about the time period.
Andrew: All right. You got the money and your wife and dad put it away in long-term stuff. Like what, real estate?
Michael: Conservative shit. I don’t even—
Andrew: I’m not going to get into a finance show over here, but I do understand now. All right. Baby Bathwater, then—do you understand, one of the issues with Baby Bathwater is no one knows what the hell it is? If I say to someone, “You should go to Baby Bathwater,” I have to go through this whole explanation of it. How do you communicate what Baby Bathwater is? If someone’s listening to me, hears me get excited about Baby Bathwater and they say, “I’m interested, but how do I tell my partner this is where I ‘m going to go for a few days?”
Michael: Our team gets mad at us too because we can never give them a definition because it’s hard. Again, we never market it. It’s just a one by one thing. That’s the whole thing. We’re an event strictly—we are an event and mastermind company, although we don’t want to be called either. We have a location. It’s best in reference to other things.
Andrew: Here’s the thing that turned me off for a while there. It’s at a ski resort. I could go skiing. People tell me a lot of people who attend don’t go skiing. I can go skiing anytime. The idea is it’s a bunch of people who you select who get together and just kind of hang out. Each of them or some of them will talk about what they do for work—go ahead.
Michael: So we wanted to have—it’s really all about—what makes us different is the people we choose, I think, and then the setting is beautiful and all that, but without the people—I’d rather be with our people at a fucking Marriott in Des Moines than almost any event I’ve gone to at our location, not even close. So, it’s people first. People are everything. It’s the way we vet people and the way we curate. You’re the same in how you choose and how you vet.
When I talk to you, I really want to know you’re fucking adding value. It’s about how we curate the people. Then the set and setting, one thing we found problems with masterminds is either you’re stuck in a room all day and nobody wants to be fucking stuck in a room. If they’re smaller and you’re supposed to be here, supposed to be there, nobody wants to be bossed around. That’s why you’re entrepreneurs. You want to be free to do what you want.
You’ve got to give people choices and options to do the day as they wish. People want to learn how to grow their businesses, get freedom, that’s wealth, things like that. I’d say half our conversations are investing and personal wealth kind of things or grow your brand. We have an emphasis on marketing because we have a lot of contacts there.
What we do is we always have at any time during the day, there’s two kinds of content to choose from. If you want to go to a workshop and learn about the newest in Facebook media acquisition, go to that. If you want to learn about how to hire a COO, go learn that, or go skiing or go for a hike or grab a fucking beer or make a bloody Mary or sleep in, meet your new friends. We wanted to have both at the same time without feeling weird that you’re not in the room. Sometimes you go to things and you’re in the fucking hotel lobby or you feel weird because then you get the dirty looks that you’re not in the content or you’re supposed to be here for the speech.
Andrew: I know. I always feel so guilty about that. I’m paying to go to this event. I don’t want to go to the event. I’m only doing it so I can hang out with the people there. I’m specifically not even going to this event—what is it called? It’s Digital Marketer. Someone on my team said, “You’ve got to go meet some of the people there.” I’m actively planning things to do to not be at the event itself. No offense to them, but I’m not going to sit in an event.
Michael: Nobody [inaudible 01:12:16]. That’s more of a congregation. Most people who go there don’t buy tickets. They just hang out in San Diego.
Andrew: I feel like I’m going to—I’m actively planning other things to do while I’m there.
Michael: We wanted to be the aisle but—
Andrew: But you’re not sure yet how to be the aisle because it’s—
Michael: It’s a [inaudible 01:12:37] of content that we have in between a mastermind that’s, again, invite-only and you can’t be in unless we’ve gotten drunk with you. That’s kind of the thing. We have to know people well before they’re in our inner-inner circle. Then we’re not—we don’t do the genius network crap where we charge people—anyway, we try not to exploit people in that.
Andrew: You should.
Michael: I will say it out loud. We looked at the things we hated. There’s a theme. Every company I’ve created or been a part of is because I hated something and wanted to do it better. Now I want to change the aisle and it might be too late on this. I looked at Joe Polish’s crap and I’m like, “Fuck this. I don’t like celebrity or that crap. Everything he does, let’s do the opposite.” That was one of our big things. I was like, “I don’t want to be that or any genius whatever or Next Level or 10X Your Crap,” No. We can’t do that. We can’t be a part of that. Does that make sense?
Andrew: Yeah. I think of it like this. I remember going to this one conference—I can’t even remember the name of the conference—where I said, “I think I want to add a membership to my site and I don’t know how to deal with that or how to set it up.” There was a guy there, another entrepreneur, who just started to—the founder of Bidsketch, who just started to put together the way that I would do a membership. He basically built it for me right there. It didn’t take him long. It took him maybe 10-20 minutes or something to get it started. But for him it was fast. For me, it took days.
There’s another conference where I went and I hung out with—they flew me over to speak and I go in there, I speak and I have this great interaction with the audience and then I meet one of the other speakers and we disappear on the conference for five hours and we’re just talking about business and he tells me stuff he’ll never say. We talk about sex with our wives. I don’t get into that with people.
But it’s important for me to like—this is the way that I think. How do we talk about it? How do I deal with it? The other thing is where do I take my business? How do you do these partnerships? The whole thing was such an interesting conversation. That’s what I want. From what I hear, that’s what’s going to happen at Baby Bathwater. Sachit went there and he loved it. Sachit hardly ever goes to conferences too. So I figure I’m going to go and check it out.
Michael: He was good. He taught people how to negotiate with podcasters.
Andrew: He did?
Andrew: He’s a good damn negotiator, isn’t he?
Michael: He’s a bulldog. He uses you as the heavy too. He’s like, “Oh, Andrew, no way. He’ll never allow me to do that.” He uses you as the person, like you’re his bad cop.
Andrew: I am kind of a pain in the ass, which frankly is what kept me from selling ads at all because I was too much of a pain in the ass and then he said, “I think I can soften you up. Don’t talk to them. Let me work it out.” For a long time, I didn’t even want to do ads. I felt like—you talked about a competitor in the ad. I’m not looking to be overly nice. I hope that it works out well for Bench, but we’ll see.
All right. Anyone who’s interested in going to check out—I think the best place to check you out is BabyBathwater.com is the site, right?
Michael: That’s our main site, but if you want to see the latest event, you can go to BabyBathwaterInstitute.com. That’s always the platform. BabyBathwaterInstitute.com will always be, Baby Bathwater, you can find it too, but it’s easier.
Andrew: Oh, I see. So, I went to Baby Bathwater Institute and it took me to the latest link and that’s where I saw Dave Asprey—am I pronouncing his name right?
Michael: Dave Asprey.
Andrew: The Bulletproof Coffee guy, Dan Martell, that’s where I saw all these people who were there. Anybody who’s thinking of going there, please email me, I want to meet you before by text so we can text and head over there and see each other. Wasn’t it that I was doing an interview with the guy from the Dollar Beard Club as he was leaving your event?
Michael: Chris Stoikos, yeah.
Andrew: It was a pain in the ass with him because I doubted him. I looked at my notes and I go, “My team just got snowed. You have to be more aggressive with these guests. You can’t just get taken in.” I get on a call with him and say, “Can I see your numbers?” He’s like, “Whatever, dude.” He starts showing me his numbers on Skype and showing me that he made $1 million selling dollar oil for your beard. I go, “What the hell?” We did an interview. It was killer. He was on his way away from your conference when I confronted him in an interview.
Michael: That’s funny. Somebody referred them and I was kind of like I ‘m not a big fan of the thing and then Hollis talked to him and he’s like, “No, these guys are fucking awesome. They’re nice.” We don’t care how much you make. I don’t give a fuck how much you make. I care about your personality. You’ve got to be nice. I was like, “He looks like kind of a tick.” Hollis said, “No, this guy’s great.”
Sothey came, him and Alex Brown who like runs his company. He’s great. Stoikos is amazing at finding people to do all the work. Alex Brown is a genius. He’s like one of my best—Stoikos is Stoikos and Alex runs the fucking—Alex is amazing. He runs everything, right? Stoikos does that. he gets talent around him, his video team.
Andrew: I wonder how he does that.
Michael: It’s a charisma he has and a way of being. He inspires them. He teaches them. They love him.
Andrew: I wonder if he’s also good at letting go. I think that’s one of my challenges.
Michael: He lets go and then he gets manic, manically focused and then lets go. He’s really intense and then lets go. He’s a nice fucking dude. They came to our thing and they had done $12 million and their cart was broken. I can’t even do anything. He’s like, “I know, we’re fucked. We still made $12 million.” My friend, Henry Fuentes, he’s like one of the partners at Six Pack Shortcuts built this $120 million. He’s also a CTO. He fixed everything for him. They were doing that much with a cart that didn’t work on mobile. Broken, not just fucked up. It’s crazy.
Andrew: Yeah. I want to talk to people like that. Is it called still Dollar Beard Club? I heard he was going to change the name. What is it called now?
Michael: I think they had to get rid of the Dollar name for some legal reasons. I think it’s just Beard Club.
Andrew: Yeah. I see. It’s TheBeardClub.com. He still does great videos, though.
Michael: Then there’s LiveBearded, also cooler than shit. Those guys are cool. They’re all friends. There’s like a beard cabal now. Stoikos and Alex and them at Live Bearded, those guys are great, kind of a higher-end beard oil.
Andrew: I’m on the site.
Michael: They’re like buddies. It’s the weirdest thing I’ve ever seen. There’s a whole beard conglomerate.
Andrew: That’s how they end up selling to each other or—
Michael: Coopetition. They all hang out and then they all do beards.
Andrew: All right. I’m going to see you in a few weeks at Baby Bathwater. Anyone who’s interested, should go to BabyBathwaterInstitute.com. Remember, email me so that we can exchange phone numbers and text each other if you’re heading over so we can see each other there. My email address is Andrew@Mixergy.com.
Cool. The two sponsors you guys heard me talk about today are—hiring a developer or designer or finance person? Go to Toptal, they’re going to have a conversation with you and help you hire the best fit for you. That’s top as in top of your head, tal as in talent, Toptal.com/Mixergy. And if you need someone to do your books for you, software and services combine to do it right at a good price and very accurate. Go check out Bench.co/Mixergy. Michael, thanks for doing this.
Michael: Thank you. I appreciate the time.
Andrew: You bet. Killer. Bye, everyone.