Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, where I interview entrepreneurs about how they built their businesses.
Today’s guest has been running a company that’s really big but I never heard of it until he was suggested as a guest. Then once I did, I couldn’t stop going through it. His name is Jeremy Young. He is the founder of Tanga. It’s an online deals site. And for me, these deal sites, if they have to do with electronics, I just get addicted. I just love going through them.
So I flip through Tanga and I see an iPad Mini for $100, a Samsung Galaxy S5 for $130. It includes free phone service. I have to go in and see, “How does it include free phone service? What’s the deal there?” Aviator glasses, two for $6 and then all these little USB batteries, USB sticks that connect to your phone–all that stuff. I get really addicted to it. Well, it turns out this is a really big business. I don’t know how I never found out about it and what I’m curious about is how it grew to be as big as it is.
Well, that’s what we’re going to find out in today’s interview and the two sponsors who are helping to make it happen are–well, I don’t have it in front of me but I can do it from memory. Today we’re going to be talking about HostGator, the company that will host your website right and Pipedrive, the company that will help you close more sales. I’ll tell you more about those later, First, Jeremy, welcome.
Jeremy: Thank you very much.
Andrew: Dude, what kind of revenue are you doing with this business?
Jeremy: We’re about $30 million this year.
Andrew: $30 million?
Jeremy: Yeah.
Andrew: Profitable?
Jeremy: We’re at break even, so very, very close. It depends on the month. Q4 we’ll be profitable for sure.
Andrew: And for the year, 2016?
Jeremy: Yeah, 2016, we’ll probably lose a little bit, but next year we will definitely be in the black. We actually run it–we are bootstrapped and we don’t have any debt, so we run it at a break even in order to maximize the growth of the company.
Andrew: That’s insane. Not insane–that’s admirable but also scary because you’ve got no cushion. Basically what you’re saying is buy a bunch of inventory–you buy it up front, right?
Jeremy: Some of it. Our business model has changed a little bit over the years.
Andrew: It has? Okay.
Jeremy: Yeah.
Andrew: Tell me about that. How much do you buy up front and what happens with it?
Jeremy: Sure. We used to buy all of our inventory, store it in a warehouse, ship it out to customers. But a majority of our business now is actually drop shipped by vendors across the country, even across the world. So, we don’t take on the inventory risk. We don’t have any of those issues, but we still do opportunity buys. For example, someone just offered us a couple thousand Adidas iPhone 6 cases for pennies on the dollar, literally. So, we bring them into the warehouse because it’s such a great deal and sometimes we’ll import products from China that we create ourselves.
Andrew: I see. And this whole thing started because you had a previous failure.
Jeremy: Correct.
Andrew: What was the name of the company that failed?
Jeremy: It was called Uberplay.
Andrew: Uberplay. It was a company that sold board games and you got into board games how?
Jeremy: So, in my previous company–I owned a web hosting company and analytics company and when I got done with that, one of my friends that worked for me had this box full of German board games. This was back probably in 2000-2001. And some of these games had sold millions of copies over in Germany, games like Settlers of Catan, for example, which is a huge kind of cult hit in the United States right now.
Andrew: I love it.
Jeremy: I think Catan has sold, what, 40 million copies around the world. I just got completely addicted and really wanted to understand how that business worked. So, I flew myself to Germany and attended the big board game fair called Spiel Essen. That’s where 150,000 consumers, just families, go and play board games all weekend. It’s kind of like the E3 for board games.
Andrew: That’s what got you into selling board games and you thought, “I can actually bring this excitement to the US, to more customers.”
Jeremy: That’s right.
Andrew: You’re the creator–you started to mention it–you’re the creator of SuperStats.
Jeremy: That’s right.
Andrew: You founded that company?
Jeremy: Yeah. So, when I was running my web hosting company out of Seattle, I had a couple of really good friends who lived down in Provo, Utah, Josh James and John Pestana. They had actually started a web development company and even creator our website for us. So, I had this idea of creating a SaaS software system called SuperStats, which allows small to medium businesses to track in real time their statistics, which back then was a little bit novel.
Andrew: Yeah, this is before Google Analytics. This was one of the big stats companies. People would have it up on their sites a lot. Didn’t you also have a little image they would put up on their site to help them keep track of how many hits they got?
Jeremy: That’s correct. Yeah. We had a little image counter. We actually had them put some JavaScript code on their website and we would show advertisements in exchange for tracking their stats. That’s how it got started. Eventually that became MyComputer.com, funded by Network Solutions and then Omniture, which is now purchased by Adobe, which is probably the largest analytics company in the world now.
Andrew: What was the revenue for that company at its height?
Jeremy: Omniture? Well, when they were public–
Andrew: Not Omniture, for SuperStats.
Jeremy: It was very, very small.
Andrew: But you were everywhere.
Jeremy: Uh-huh.
Andrew: I would do a whole interview with you–I wish we had the time now. I would do a whole interview with you just on that company. It was everywhere, wasn’t it?
Jeremy: Yeah. It was getting to be pretty big. But we had to maximize the revenue by selling advertising, which back in the late 90s it was starting to get very, very competitive.
Andrew: Yeah. So, the reason that I brought that up–by the way, I’m looking at you as I talk about it. You don’t seem as excited about it as I am. Why not?
Jeremy: It’s been a while.
Andrew: Yeah?
Jeremy: Yeah.
Andrew: Was it also a painful company for you or a painful memory in any way?
Jeremy: A little bit. I got out pretty early on. So, I didn’t get the big hit that Josh and John did, but good for them. They ran and created an incredible company. Now Josh is doing it again with Domo. So Domo’s now a $1 billion to $2 billion company that he basically started and created out of Salt Lake City. So, you got to hand it to Josh. He’s an excellent, excellent manager, excellent operator, very, very visionary. You’ve got to hand it to him.
Andrew: Do you feel a little bit competitive with him or do you feel like, “Why am I selling these $6 aviator glasses two for the price of one when he’s doing this $2 billion business?”
Jeremy: Not really. I mean I don’t think about it very often. I love what I’m doing and he’s doing an amazing job and good for him. There’s enough money in the world for everyone to be successful. So, I don’t think about it that often.
Andrew: So, the reason I brought up Uberplay and asked you why you got into it is because you were a software guy. You understood the internet before the world understood it. You understood business online before the world understood it. Why did you go to games, which way predates the internet, which is like the opposite of advanced technology?
Jeremy: That’s right. A lot of tech entrepreneurs out of Seattle were getting into the board games space. I think it has to do with the idea of being creative. That’s something I have always strived to do in all of my business. I think it was a very nice outlet. These games were super-fun, right? They’ve sold millions of copies in Germany, around Europe. They’re family-friendly. They got families together.
The vision was getting away from the Risks and the Monopoly of just rolling dice and luck-based games and getting families to take an hour or two to get together around the table, like they do in Germany. Going to Germany and experiencing that first hand really got me excited about the opportunity to try to bring that same excitement of fantastic board games to the United States. So, that’s why I got into it.
Andrew: And the model was going to be what?
Jeremy: It was trying to use distribution channels in the United States to distribute our games. That’s where I kind of jump into things a lot of times without knowing what I’m doing. I flew to Germany to start a board game business when I had no idea how the entire process worked, right?
So, I didn’t understand the distribution networks in the United States. So, I licensed these games. We produced them in Germany and China. We had incredible art. We did all of the translations. We probably had 10 different SKUs at the beginning, brought it to New York Toy Fair, setup a booth and thought, “Okay, we are set. We’re going to be able to get these games distributed in Walmart and Target and Barnes & Noble.”
And it just doesn’t work that way, unfortunately. Hasbro and Mattel really have monopolies on the shelf space of these stores because it’s very, very limited. So, I’d go up to a Target and say, “I have Alhambra. It’s the German game of the year this year, sold millions of copies. I have it for the United States market. It’s a fantastic board game. How many would you like?”
And they’d kind of chuckle and say, “Okay. Well, if you produce half a million copies, we’ll send it to our distribution centers. If you sell, you have to sell through 10% in a week or you’re going to take it all back and we want a half-million dollars in advertising.” It’s just on and on. So, really we were stuck marketing and selling through hobby game stores, comic stores, online. Yeah. It was very, very difficult to get any traction.
Andrew: What’s the deal with you, you had Motley Fool’s Buy Low Sell High game?
Jeremy: Yeah. So, the Motley Fool guys, they were big board game fans. They personally knew one of the biggest board game designers, Reiner Knizia. So, when we were talking with Reiner about producing one of his games–he had a game called Palmyra at the time for the English market. He said, “Hey, this is an economics game. It’s about buying and selling. Why don’t you contact the guys at Motley Fool and see if we can co-brand this board game surrounding their brand?” And that’s what we did.
Andrew: Okay. Did that go well?
Jeremy: No.
Andrew: No?
Jeremy: No. I mean, in the hobby game market, if you sell 5,000 pieces of a product in the United States in one SKU, you’re doing very, very well.
Andrew: 5,000 is well.
Jeremy: Yeah. That shows you how small the market is.
Andrew: I see. All right. And I guess then that some of these Kickstarter campaigns that I’ve seen for board games must be huge in the board game space.
Jeremy: Yeah. Kickstarter didn’t exist when I was doing this, right?
Andrew: Yeah.
Jeremy: So, a lot of the Kickstarter companies–companies using Kickstarter to promote their games are doing fairly well. Tasty Minstrel Games, for example, has a Kickstarter on all of their games. They’ll sell out of 4,000 pieces at the beginning, which helps fund the production, not a lot of cash out of hand. So, it’s been good for the hobby game industry, for sure.
Andrew: All right. So, then you were sitting on all these board games and you said, “I’ve got to get to out.” And that, “Got to get out,” is what led to this big success that we’re here to talk about today. What was the plan for getting out and how did it lead to Tanga?
Jeremy: Okay. So, I had all of these games sitting in a warehouse in Ohio and probably had a couple hundred thousand pieces of 50 different SKUs. I could liquidate them through liquidation channels, but I had always wanted to do a daily deal-type of company. If you remember back 16, 16 years ago, American Express had on their website during the holidays where you could login and they would have specific deals they would put up at incredible discounts. They would sell BMWs for $5,000. They would sell $10,000 trips for $1,000. They would sell $1,000 electronics for $100. They had a very, very limited quantity.
Andrew: I had no idea.
Jeremy: It went super-viral. So, my idea was if you have the right product at the right price point at very limited quantities, you can create this viralness of people coming back to the website and checking every day if the product is good.
Andrew: I get that. And this is before Groupon?
Jeremy: This is way before Groupon.
Andrew: Not just American Express. Even your idea was before Groupon. Groupon started 2008. You got started a couple years before that.
Jeremy: Yeah. We were in 2006. The idea was percolating years before that. Woot did something similar, where they had one deal every single day and kind of created a viral sensation.
Andrew: Okay. So, how did that translate into–how did you use that?
Jeremy: I decided to start a one deal a day website with the sole focus of selling my product plus other people that I knew that had the same issue of getting distribution on these board games–so, family entertainment products, puzzles, puppets, board games, things like that. So, what we decided to do is launch the website and for the first 30 days, people could come and solve a really fun puzzle.
We created a whole system where people could login, create a username and avatar and they would compete against each other. So, whoever solved first got 100 points. Whoever solved second got 99 and then all the way down to the 5,000th user still gets some points but less. For 30 days we just had this really fun puzzle that people would solve. And then on the first day of the next month, we did a puzzle and a product. So, we were kind of known as this geeky, puzzley type of website that also sold products as well.
Andrew: I see. So, it wasn’t just going to be a deal site. It was going to be a content site that also happened to sell products.
Jeremy: That’s right.
Andrew: How’d you do with your first big product sale?
Jeremy: We bought, I believe, some refurbished Xbox’s. They sold out. We didn’t have very many.
Andrew: Did you sell your board games first or did you sell this Xbox?
Jeremy: No. We actually started with an Xbox sale.
Andrew: You did?
Jeremy: Just to try to create some excitement. Xbox’s were new. So, that’s where we started. But we immediately went to board games and family entertainment products, throwing in with some electronics as well that we would purchase.
Andrew: Okay. How did that do? How did the board games do on your site?
Jeremy: They did fantastic. We partnered with a company called BoardGameGeek. They get tremendous amounts of traffic. If you look at their Alexa rating, you’ll be pleasantly shocked, I think. So, they would help us push people to our website to purchase these board games. So, I think at one point I had a game called Alhambra. I think I sold 2,500 units in 24 hours.
Andrew: Wow.
Jeremy: So, we were able to push volume of that specific genre of product.
Andrew: And then did the site that you partnered up with, BoardGameGeek, did they get a share of the sales?
Jeremy: No. I actually gave them a small piece of equity and eventually bought them out of their equity as we kind of moved away from board games and focused on the broader market.
Andrew: Look at this. These guys have–you’re right–11.4 million monthly visits according to SimilarWeb.
Jeremy: Yeah.
Andrew: You guys have, according to SimilarWeb, 1.9–2 million monthly visitors.
Jeremy: Yeah.
Andrew: Wow. That’s impressive for a deals site, for an ecommerce site.
Jeremy: Yeah. BoardGameGeek, it’s pretty amazing, 11 million to 12 million people. It’s pretty impressive.
Andrew: I’ve never even heard of that site too.
Jeremy: Yeah.
Andrew: All right. So now you’ve found your model. Did you decide, “This is the business I’m going to grow. This is going to be my next big company?”
Jeremy: Not really. I really ran it as a hobby for about four years. I was doing some other things with my old business partners–trading currencies, writing scripts to trade currencies and just kind of dabbling in lots of different stuff.
Andrew: Okay.
Jeremy: And then really I decided that I was going to introduce additional categories because what would happen is if I put a product up that wasn’t priced right or it didn’t resonate, I could go 24 hours without making very many sales. So, I really broke the company into four to six different verticals. We had a play product. We had an electronic product, a jewelry product. We tried home and garden. So, we were testing different daily deals every single day where we could offer six different deals instead of just having one.
I ended up doing a price mistake at one point on a magazine subscription that really led me to believe that I had something special with my website. Things were kind of tapping out about $1 million, $2 million in sales. I put a magazine subscription up and it was supposed to be like $12.99 or something like that and I accidentally priced it at $4.99. I think I sold a couple thousand subscriptions in 24 hours. We still made money on it, but I realized that we may just have a product and price issue in order to really scale this business very, very quickly.
So, we ended up moving to Arizona. I was just working out of my garage, basically with a couple of people. At that point, I decided I was going to bring on some people that I’ve worked with in the past in my other previous businesses and really turn this into a full ecommerce site that we could grow.
Andrew: And the realization you had was, “I can grow my sales if I found either better products or lower prices.”
Jeremy: Correct.
Andrew: That’s the thing.
Jeremy: Right.
Andrew: How’d you get so many customers to come to your site after you moved beyond board games? BoardGameGeek could only get you so many people.
Jeremy: Sure. They gave us quite a big head start with the number of customers that they were able to push our way. But really after that it was through our marketing efforts, through affiliate marketing is our biggest source of new customers. We have very, very great relationships with our affiliates. So, all of the big deal sites like Slickdeals and Brad’s Deals and some of the big mommy bloggers out there, we’re able to create these personal relationships with the people who own these websites and that’s helped us be able to receive traffic from these great sites and convert them into customers on our own.
Andrew: I see. And they are all linking directly to individual products, it seems like, right?
Jeremy: That’s correct. Yeah.
Andrew: I didn’t realize how many of those there were. There’s Deals2Buy. There’s Offers.com. CNET apparently is an affiliate.
Jeremy: Yeah. Those are all partners.
Andrew: DealNews.com, FreeStuffFinder.com, RetailMeNot–is RetailMeNot an affiliate?
Jeremy: Yes.
Andrew: That’s how they work, huh? They get their discount code and then they send people over to you.
Jeremy: Correct.
Andrew: You guys are also really big on email marketing.
Jeremy: We are. It’s a huge part of our business, over 50% of our business. We work with ExactTarget and Salesforce and we have very great email marketing campaigns where we A/B test everything. We’ve got hundreds of different segments where we’ve segmented our customer base to be able to send them personalized deals and everything is tweaked on a moment to moment basis to try to maximize that revenue.
Andrew: All right. I’ve got to find out about that. I didn’t know that was even possible. Salesforce does that, their software?
Jeremy: Yeah. Salesforce bought ExactTarget. So, ExactTarget is probably–
Andrew: I see. It’s not the Salesforce main product. It’s ExactTarget.
Jeremy: Correct. Yeah. ExactTarget is now integrated into the Salesforce platform, which makes using some of their other services quite easy.
Andrew: Let me take a moment here to talk about my sponsor and I’m going to ask you a question about them and then I’ll come back and ask you about ExactTarget. My sponsor, the first one, is a company called HostGator. They do web hosting easily, inexpensively and dependably. Let me ask you this–Jeremy, if you could start today with nothing but a web hosting site, what would you do? What’s the business you would launch?
Jeremy: That’s a great question. I would probably try to find a very unique product that had a niche that I could target and go after, kind of like I did with board games, for example. If I could find some unique board games, for example, that I could target to a specific niche, that might be a way to get in the door to start a very small ecommerce site and continue to grow it as time goes on.
Andrew: And you like ecommerce, huh?
Jeremy: I do. Yeah. It’s been fun. It’s been ten years. We actually celebrated our ten-year birthday about two days ago, three days ago. So, October 1st–it’s been ten years.
Andrew: So, how would you find these nichey products? I don’t know how I would come across board games. Is there some kind of Google search I could use to find out the next new hot thing–not the next new hot thing, but what’s really hot but undiscovered like board games?
Jeremy: It’s really just kind of getting your feels out there. Reddit is a great place to find those types of products. People are talking about up and coming things and what’s new and what’s hot in different categories.
Andrew: Where do you go on Reddit to find that?
Jeremy: Well, so for example, I really love travel and I really love wine. So, if I go to the wine subreddit, I can see sommeliers talking about the newest and best upcoming producers like people in Beaujolais in France and those types of things. So, that kind of puts me on the cutting edge of what’s hot and what’s out there, what’s new and exciting. But Reddit has hundreds of thousands of subreddits. Apple, for example, or just pretty much anything–they’re out there.
Andrew: Got it. So, what you’re saying is just find a subreddit that’s especially hot, see what people are especially excited about and that could be one of your first products.
Jeremy: That’s right.
Andrew: All right. I like that. It seems like also trolling Alexa’s rankings or I happen to use SimilarWeb, SimilarWeb’s rankings to look for sites like BoardGameGeek.com that happen to have a lot of traffic on a topic that most people wouldn’t consider that sexy. It seems like that’s another way to do it.
Jeremy: Absolutely.
Andrew: All right. You’re saying find that unique product and then sell that one thing and you sell it through affiliate programs too?
Jeremy: Yeah. If you have something that resonates with specific affiliates, it’s a great way of getting your name out there and that product out there. These affiliates are looking for deals and commissions, so you’ve got to give them what they need in order for them to be successful. It’s got to be a win-win partnership or they won’t list your product.
Andrew: All right. Well, if you’re listening to me and you want to take that idea or any other idea and start it off on HostGator, there’s a special URL you can use that will give you 50% off and they’ll take good care of you because you’re coming from Mixergy. That URL, of course is, HostGator.com/Mixergy. They’ve got a whole lot more in there. But for me, the best feature they have is that they’re really good at support.
Finally, before I finish it, I want to say I know most people have sites already. If you’re not happy with your web hosting company, you shouldn’t have to stick with them. HostGator will make it very easy for you to move. In fact, if you have a WordPress site, they’ll migrate for you. Go to HostGator/Mixergy to sign up, HostGator.com/Mixergy.
All right. I’ve got ExactTarget here on my screen. So, what exactly are you doing with email? How are you targeting people? I didn’t even know this was possible using off the shelf software.
Jeremy: Yeah. It’s not necessarily off the shelf. It’s very expensive. It’s enterprise software, for sure. If you’re a small business, you probably want to use like a MailChimp or something like that. But once you outgrow a MailChimp, you really want a software system that can take all of your data about your customers and your purchases and all of your searches and clicks and everything else about them and share that data with an enterprise email software system in order to be able to target the customers with the right product at the right time at the right price. That’s what we strive to do every single day.
Andrew: So, what kind of targeting are you doing on the right? What kind of targeting are you doing that’s especially effective?
Jeremy: Yeah. So, let’s say you come in and you really love the Dallas Cowboys and you’re into hunting, right?
Andrew: And how would you know that about me?
Jeremy: A lot of different ways. One is we ask questions to our customers when they come to the website. Two is we look at what you’re searching, what you’re browsing, what you’re clicking. And then we have algorithms that can tie those things to different products on the website. And then once we have that information about you–and this is very basic stuff that most ecommerce companies can do if they put their mind to it, right? It’s not rocket science.
But what we’re trying to do is then use human nuance where we have a group of people here that are really thinking about what type of customer can be linked to what product. A lot of times computers have a hard time with that human nuance, right? So, if we can understand you as a customer through a lot of different ways, then we can then match that right product to you every single day.
Andrew: What’s an example? So, I can understand that if you guys watch me, you’ll know my interests are very narrow. Any mobile tech I can’t stop clicking on and I happen to have an interest in Chromebooks. I just love them. I don’t know why I love Chromebooks. So, it’s easy to just keep feeding me more emails about Samsung phones, about USB sticks about all that stuff. I’ll just keep clicking over. What’s unexpected that a human would know but I’m not even aware of myself that I would want to check out?
Jeremy: Yeah. So, let’s say that we ask you a question about, “Do you like to travel?” for example. So, you come in and you say yes. Then maybe the next time we ask you a question it’s, “Where are you planning on traveling?” Then we can start to build a customer dossier and profile about you where we can then use human nuance to say, “Okay, you are planning on traveling to Paris.” Well, we’ve got this luggage scale now where we can put in front of you where now we can say, “Hey, when you travel, don’t be hit with a $100, €100 overage fees.”
Andrew: I see.
Jeremy: Buy this luggage scale and use it on your next trip and you’ll save hundreds of dollars. Those are the types of things that–let me give you another example. Take, for example, whiskey. We don’t sell whiskey but this is going to lay out how this particular process might work. There are a lot of different types of whiskeys, from Jack Daniels to scotch, right? There are hundreds and hundreds of different types of whiskeys.
Andrew: I’ve got one right here.
Jeremy: There you go. So, we can know a lot about you as an individual. We know that people who are into hard rock or for example, live in certain areas of the country may gravitate towards Jack Daniels, rather than someone who is a high-powered business person living in New York City is probably not going to gravitate towards that particular whiskey. But a computer may have a hard time understanding which whiskey a consumer wants, whereas human nuance, if we have your dossier or your profile in front of us, we can start matching specific types of product categories, subcategories and specific products to you individually.
So, that’s our goal. We want you to have that aha moment when you come to Tanga that you didn’t even know what you were looking for but what’s placed in front of you is so cool at the best price point at the right time that you have to have it. That’s our goal, to do that every single day. It’s going to take us 18 months to fulfill our vision, but we’re right in the thick of it right now and trying to make incremental changes as we go along.
Andrew: You’re saying this kind of customization is fairly new to you?
Jeremy: Yeah, that specific customization, absolutely. The basic customization that everybody does like Amazon, “People who bought this also liked this. People who browsed this happened to buy this.” That’s stuff that if you have the right software or the right people working on it, anybody can do. But I think the human nuance part of it is a little bit different. That’s what Netflix does. That’s what Pandora does to match that music to the right customer and we want to do that in ecommerce.
Andrew: I think your example about whiskey is a really good one. Yeah. I can see how that would work. So, affiliates are really big for you. Email, very big. What else are you guys doing?
Jeremy: We are now dabbling into some SEM and some SEO-type customer acquisition.
Andrew: And you hadn’t been doing it up until now?
Jeremy: Not a ton. We did try to rank for a keyword of “deals” several years ago. It cost a lot of money and we almost got there, but Google keeps changing their algorithm. So, it’s kind of a futile attempt at some point.
Andrew: What did it cost you?
Jeremy: I think we paid $150,000 over six months, maybe, to try to rank for the keyword.
Andrew: And how close did you get?
Jeremy: We got to the top of page two, but that drives nothing, right?
Andrew: No. Oh wow. Okay.
Jeremy: We’re always keeping our eye out for SEO and SEM opportunities. We do some retargeting as well, which depending on how it’s setup and who’s offering it can be profitable for us. One thing that we’re not doing like some of our competitors have is they’ve raised $20 million to $30 million and then they go out and spend $200,000 on a Facebook logout page for a day and it drives tremendous amounts of traffic and they end up getting quite a few traffic. But man, when that money runs out, a lot of these companies have been in trouble. So, we’re trying to grow very steadily organically, 20% to 30% a year and do it smartly, do it profitably.
Andrew: Why? Why not raise money? You’ve got competitors who are doing really well right now. It’s a hot market.
Jeremy: Yeah. It’s a lifestyle choice for me. I’ve done the raising money before and I’ve actually when my first company sold to Micron Electronics, I had to work for a publicly traded company for a year or two and so answering a board of directors or answering to someone else makes it very difficult for me to run my business the way that I want to.
Andrew: I see. When you go home, can you put the work behind you or are you so deep into it because it’s still your money because you’re running it at breakeven that it’s all risky?
Jeremy: I was a lot more of a stressful person ten years ago, five years ago than I am today. I’ve done a lot of meditation, a lot of counseling. I can somewhat put it away. It depends. If there are stressful things going on at work and problems, I do take it home, unfortunately. But I do have a great staff here, a great C-level executive team that takes on a lot of those–
Andrew: I want to ask you about that. You started out with six people. Before I get to that, you said meditation. How did meditation help you eliminate stress or deal with stress?
Jeremy: It really just is trying to clear your mind, trying to create a space of just peace and calm and trying to look at things in a different perspective. So, I used to always get so nervous that sometimes I’d even make myself sick.
Andrew: Literally?
Jeremy: Literally.
Andrew: Do you have an example of a time you did that?
Jeremy: Let’s see here. . . Well, when I had my web hosting company, for example, we were at a point in our business where we had 120 employees. We were running out of server space. We had a small server farm in Downtown Westin building in Downtown Seattle. And we were running out of office space. This was probably the beginning of 1999.
So, things were going crazy with the internet, as you well know. We had to make some decisions because we were bootstrapped as well at that point. At that point we either had to raise money or sell the company and we were running up to some very, very hard limits in what our server capacity was. So, we could possibly maybe rent server space elsewhere, but the office space, we needed to go from probably 20,000 square feet to 40,000 to 60,000 square feet.
That year, literally I was stressed every single day, stressed at home. But luckily we found a buyer in Micron Electronics who was doing a roll up. I think we were introduced to them in August or September and we closed the deal in December of ’99.
Andrew: And you were physically sick during parts of that.
Jeremy: Absolutely.
Andrew: What was the illness?
Jeremy: Just upset stomach, headaches, sometimes not being able to sleep. Really I think meditation and just having a different perspective on life has really helped me become a better boss, a better husband, a better father.
Andrew: What’s your meditation practice? What does that look like?
Jeremy: Yeah. So, I’ve got a friend, Noah Rasheta, who has a blog called Secular Buddhism.
Andrew: Secular Buddhism? Okay.
Jeremy: Yeah. He also does a podcast in it as well. But it basically takes Buddhism and gives me the skills to meditate and think about life in a different way that is not religious in nature. So, it’s been fantastic for me just being able to think about life differently. Can I give you an example?
Andrew: I’d love it. Yeah. I’m on his site, by the way.
Jeremy: Have you ever heard of the allegory of the cave?
Andrew: No.
Jeremy: So, it’s a Buddhist allegory, but it makes sense in so many different situations. So, the allegory of the cave is there are these four men that are inside this dark cave and they’re chained against a wall. And they’ve lived their entire life chained against this wall.
And in front of them are these shapes and shadows and noises that they’re hearing from the people behind them. And all they’re seeing is a fire, the light from a fire behind them and then these shapes and noises and things being displayed on the wall in front of them from behind them, but they can’t see what’s going on behind them. And that’s all that they’ve ever known in their entire life.
And then one of these guys eventually escapes and he climbs up this latter, gets to the top of the cave and he is outside in the forest and he’s walking around and he sees these meadows and flowers and trees and sunshine and animals and birds and he’s never experienced any of this before. It’s blowing his mind, maybe not even having the vocabulary to even understand what he’s seeing.
And so eventually he crawls back into the cave and he goes up to these three guys and he says, “Hey, you’ve got to see what’s on top of this cave. There are all these amazing things and colors and animals and you’re not even going to believe it. And these people do not have that perspective because they’ve never, ever seen anything besides what has been in front of them. So, for them, this guy is crazy. They don’t want to leave. They’ve got whatever they need in front of them. That’s their life. This guy is completely insane.
So, eventually this guy gets frustrated and he walks up and he disappears. But what’s interesting is once you’re out of the cave, we really are in a different cave. Our perspective is what’s in front of us. Everyone else has different perspectives and there are things that we don’t know. So, my life has been a series of escaping these caves and having a completely different perspective on life and then really trying to grow and learn to develop a different perspective and exit that cave. You’re just basically learning as you go in life and there all these different caves you continually leave and learn and grow from.
Andrew: Would you consider Mormonism one of the caves that you were in?
Jeremy: Yeah, for sure. I was raised LDS and raised Mormon. My great, great grandfather was Brigham Young. So, my Mormonism goes deep. It goes all the way back to the founders of the church. My whole family and a lot of my friends are still in the church. But for me and my family, I did a ten-year journey where I continued to research the history of the church from a different perspective, a true perspective, a real perspective.
But not a faith-promoting perspective that is typically told to us in general conference, for example, or told to us from the pulpit, where they say, “Don’t Google, only read approved sources,” and those types of things, which most fundamental religions all give that same narrative. It doesn’t matter if you’re Mormon or Scientology or Jehovah Witness. They all tell people to not Google or look at outside sources and just believe.
Andrew: “Trust us.”
Jeremy: Yeah. In Mormonism they say, “When the prophet speaks, the thinking has been done.” So, for me, I started reading some of these early history books and led me on a journey of spending 10,000 hours of research and looking at all of the different footnotes and just really diving deep into Mormon history.
Andrew: What’s one thing that shocked you? Do you know the podcast Mormon Stories?
Jeremy: Absolutely. Yeah. John Dehlin is a very good friend of mine.
Andrew: You know him?
Jeremy: Yeah.
Andrew: He does such good work as a podcaster, I can say. He’s so good at telling people stories, letting them get their stories out there. There often is like some of his guests will have one thing that just snapped them out of the cave.
Jeremy: They call it the shelf-breaking.
Andrew: Shelf-breaking, that’s what it’s called?
Jeremy: What happens is as you learn about Mormon history and it doesn’t match the narrative you’ve always been taught, you put these items on a shelf. Then eventually that last item hits that shelf and the shelf collapses. They call it the shelf-breaking.
Andrew: I see.
Jeremy: But yeah, John Dehlin is a good friend of mine. We just went to Italy together in April. Very great guy. He was in one of my Mormon wards in Seattle. That’s how I got to know him.
Andrew: When I think about how I want to tell stories here on Mixergy, I think it’s the same way that he wants to tell he’s stories on his podcast. He’s not guiding you to tell what you don’t want to tell and he’s not trying to be shocking, he’s just trying to let you tell your story.
Jeremy: Right.
Andrew: He has a good sense of rhythm and storytelling and comfort with himself so the person could talk. If I can recommend any podcast it would be that. I wonder if anyone would even care because it’s a religious podcast.
Jeremy: There are a few podcasts I think a lot of non-Mormons would actually love to hear, like the Neon Trees with Tyler Glenn. So the lead singer of Neon Trees, amazing guy, that would be one I would recommend to everyone. It’s very fantastic story–
Andrew: What was it called again?
Jeremy: It’s Tyler Glenn is his name. If you Google Tyler Glenn Mormon Stories it will pop right up.
Andrew: So, what was your shelf-breaking moment?
Jeremy: Yeah. So, I had a series of shelf breaks. The biggest one for me–there are two if I can give you two examples–one was polyandry. So, I always knew that my great, great uncle Brigham Young practiced polygamy. I knew somewhat that Joseph Smith was a polygamist as well. But I was always told from my parents and from my teachers growing up that it was the widows and it was the old people that needed to be taken care of.
What I found out is that just isn’t true. Joseph Smith actually married 11 wives of people that were in his congregation and people that followed him. So, some he would even send on missions and then proposition their wives for marriage while their husbands were away. The church now admits this as fact.
Andrew: They do? I didn’t know that. Okay.
Jeremy: Because they were running into so many problems of people finding out about this information that they’ve written these essays and published them on their website. Without direct links, you have to be looking for them. But they have acknowledged this stuff is indeed true. I had never heard of polyandry where Joseph was marrying other men’s wives in addition to marrying just women in general and then knowing that Emma Smith, his first wife, didn’t know about a majority of these wives, maybe only a handful out of the 30 or 50 women he possibly married. That really was a shocker to me.
Andrew: I think to others too. I heard that on Mormon Stories also. What was the other one?
Jeremy: He married teenagers, 14-year olds. I have a daughter that’s 16, a daughter that’s 17 and really when they hit that 12 years, 13 year-mark, that’s really when my shelf started to collapse. It was very, very hard for me to reconcile that.
Andrew: Wow. Okay. Yeah. I get that. That is painful. But you know what? There are people who are Mormon Stories who said–I know I’m going way off topic here but it’s fascinating–there people on Mormon Stories who said they had that shelf broken moment but they still stuck it out because there’s something about that community, there’s something about having that family, something about being taken care of.
When Mitt Romney was running for president, I heard stories of the things that his family would do for families in need and I thought this is a great reason to be a Mormon. Did you feel like you missed out on that?
Jeremy: No. I loved the Mormon people. There’s a saying in the church that–because so many people end up getting offended by someone in their ward because the wards are so closely congregated. Some people will leave the church and say, “The church is perfect but the people are not.” I happen to believe the opposite. I think the people are amazing in the church. I think the church is the problem because they haven’t been truthful.
So, for me it’s the exact opposite. I loved my wards. I loved the people in my wards. But for me and my wife and my children, eventually we got to the point where we felt in order to be honest with ourselves and the way they were treating the LGBT community and some of the “revelations” that they were having about the LGBT community pushed us over the edge where we could no longer support the church.
They now say that if you’re gay and you’re in a committed relationship with someone, you’re automatically considered an apostate and you’re excommunicated. Not only that, but your children can no longer participate in the Mormon Church by being baptized, by being blessed. Really, you can still go to church, but why would any kid of gay parents go to church and be otherized? It just doesn’t make any sense.
Andrew: I’ve heard of how many people were pushed out because of that.
Jeremy: That really was the last straw for us. We didn’t believe for years before that. I haven’t believed in probably ten years and my wife has been two or three years ago. But really that policy was enough for us to say, “We can’t be associated anymore.”
Andrew: And still there’s so much about that community, that bond, as you say, the people are perfect and they’re excellent and the community is excellent that here in San Francisco I’ve noticed there are a lot of people who are so techie, so, “Prove it to me or I don’t believe or I can’t go along with it.” They’re atheists. But they still long for that community of having the community that comes with religion that they’re forming these small organizations that try to mimic what comes with religion.
Jeremy: Absolutely.
Andrew: I just heard of something called Blue. I think it’s founded by a venture capitalist. I don’t know much about it. He’s trying to create this community, I’ve heard. I haven’t investigated it, but I’ve heard from a couple people about it. I can see the need this organization is trying to satisfy.
Jeremy: All right.
Andrew: All right. Let me take a break here and then come back into your story. I want to know about your transition from Utah to Arizona. It seems like that was major for you. I want to know about how you went from having a couple people or six people or so working with you in your garage. Then you went and professionalized the company. You hired C-level people. We’ll talk about all that.
First, I’ve got to tell people about a company called Pipedrive. Do you know Pipedrive?
Jeremy: I do not.
Andrew: Here’s what Pipedrive does. It says, “Look, organizations that sell, that sell one to one have a structure for their sales, set of steps they need to go through to make a sale. Well, Pipedrive said “We’re going to create software that organizes their process into a series of steps so that everyone in the sales process knows what those steps are and then we make it easy for them to move potential customers down each one of those steps.”
And that’s what we use to book guests. You actually are in our Pipedrive. When someone suggested you, we put it in the first column of our Pipedrive. Someone else had to go in and say, “Is this really a good fit for Mixergy?” Once you were, they moved your card to the next column. Then we had to do a pre-interview. Once you were pre-interviewed, we moved you to the next column. There are a lot of people who are involved in getting you here for me and you to have this conversation to have a big audience.
The thing that coordinates us and ensures that we hit success, which for us is having you on the site, is Pipedrive. We use it for booking guests, but it’s really meant for sales. It’s allowing people to organize their sales process and get a whole team of people to work together to close sales.
I could describe it forever, but I think the best way to really understand it is for whoever listening to me to just go and try out the software. You will see–it will organize your sales team. I promise. I love this software. I wish I’d created this software because I know what it’s done for us.
If you’re listening to me, go to Pipedrive.com/Mixergy. They’ll give you two free months, Pipedrive.com/Mixergy, two free months to use it. You can experiment and you’ll see that it increases your sales. I know it will. It’s done wonders for us.
By the way, Jeremy, I can hear my voice, how tired it is. We have a three-week, four-week old baby at home. Even though my wife said, “Andrew, you’ve got interviews today, sleep through the night. I’ll take care of everything.” When the baby was crying, I woke up. When she was taking care of our son, I felt guilty that she was doing it while I was sleeping and that kept me from having a full restful sleep.
I already had like–I’m not a soda person, but I have a 12-pack of soda that was delivered yesterday that I wish I bought one can to sit right here so I can drink it while we’re talking because I hear it in my voice. It’s tough. Your kids are older. You’ve gotten past this, huh?
Jeremy: Yeah. I have a 17-year old, a 16-year old and a 13-year old. It’s different though. It’s actually more tiring for us as they get older. For example, it’s fall break right now. Every kid wants to have two, three, four, ten people over. So, we’ve got people over to our house until midnight or later swimming and playing and yelling and screaming and it’s actually harder for us, I think, as parents.
Andrew: I can see that because then I have to go make sure no one gets hurt, nothing gets damaged.
Jeremy: Right.
Andrew: I can never go back to relaxing on my own in my spare time. Actually I don’t even want to relax. I want to work with no distractions. All right. Speaking of work with no distractions, in the guest house, you had six people. Then you moved and you started hiring C-level people. I feel like that professionalism is something a lot of companies don’t get to. How were you thinking about those hires?
Jeremy: At the beginning, I wanted my really good friend Matt Molen to join the team. He has been with me at every single company I’ve started. He was currently working for a company called Simply Fun, which was another board game company we started that still exists. It still runs out of Bellevue, Washington. We raised a bunch of venture capital money and eventually the investor crammed out all the initial investors and owners. So, I ended up leaving that company and Matt stayed on as their director of marketing.
So, when I came down to Arizona and we decided that we wanted to bring on some more senior-level people to help really jumpstart the growth of the company, Matt was the first person I called. He was really integral in helping us define a vision, create the right brand, the right messaging and really help us nail our affiliate and marketing programs.
Andrew: What did it take to nail the affiliate marketing programs?
Jeremy: Just creating a strategy and building the relationships with the right people. We spent a lot of time on the road going to conferences, visiting them, becoming friends with all the major affiliates so that we could build that trust. They need to trust us as well. They need to know that when we give them a deal it’s been vetted, the product is going to arrive on time, it’s going to be a good product and it’s going to be best of web price point.
Andrew: And you’re going to pay them or that your numbers are right.
Jeremy: Exactly. That’s right. We’ve had times where something’s happened in code and they’ve screwed up a link. They would have never known we had 1,000 orders of something and we call them and say, “Listen, you screwed up your attribution links.” This happened a couple weeks ago with Slickdeals. “And we owe you money.” I think they’re really thankful that we’re completely honest in what we owe them. It helps build that trust and those relationships.
Andrew: What are the conferences that allowed you to get to know people like Slickdeals?
Jeremy: Affiliate Summit. So, they have one in August in New York City. They have one in January in Vegas. But a lot of times it’s really those personal connections when I travel to Las Vegas or when I travel to Hollywood, I’ll just go and take them out to dinner, visit them. We try to keep in contact as friends, not just as business professionals.
Andrew: Was there one that was especially hard to get to know?
Jeremy: Slickdeals maybe a little bit just because before they were pretty small. They only had five or six people. It was hard to even find out who was behind Slickdeals for a long time. So, that took about a year to find the right people and make that introduction. Van, who started the company, is pretty shy, but super incredibly smart guy. Then a friend of his that brought on, Bryant, kind of ran–I think he was president of the company. So, we were able to finally make those introductions after a period of time and take them out to dinner and start to build those friendships, which is great.
Andrew: What did you do to get to know someone who is so shy and who’s being courted by tons of people?
Jeremy: Just be yourself. I think we had a lot in common. We’ve been in technology for 20 years, both of us. Really you have to be authentic. It’s all about authenticity, I think, and transparency.
Andrew: But getting through is pretty hard. I’m authentic. I think if I tried to get him on as a guest, for example, on Mixergy, we’d need a process.
Jeremy: Maybe. I don’t know if he would feel comfortable doing it, right? It’s not his personality. Maybe. He might do it. If you want to talk to him, let me know.
Andrew: Yeah. There are a couple people who are a little harder because they need more time, they’re not promotional, they’re shy. But we do have processes for that. Do you have a process for getting to know someone like the founder of Slickdeals when he’s not as easy to get to know, when you can’t go see him at a conference?
Jeremy: I really don’t. It’s really just about either trying to make a connection through someone I know or network or just sending emails through LinkedIn or through their website. I don’t have a specific process. Maybe I need to use one of your sponsors.
Andrew: Pipedrive, I’m telling you, they’ll do it. That’s exactly what it’s for. Slickdeals is another one of these sites, Slickdeals.net for anyone who doesn’t know it. For me it’s like Pinterest. I don’t get captivated by Pinterest. I don’t want to see a bunch of photos. But a site like Slickdeals or yours, I keep wanting to click around and say look at this, a 10,000 milliamp battery pack for $14. I bought one of those from Amazon for $30.
Jeremy: Right.
Andrew: Here’s the thing. With your site and others, it takes longer to arrive. Amazon is going to deliver it next day or two days if I have Prime, which I do, right?
Jeremy: That’s right.
Andrew: With you, it’s a couple weeks.
Jeremy: Yeah. It depends. It depends on where you live and the location of the drop shipper. A lot of our drop shippers are out of New York. If you live on the East Coast, you’re going to get your product in for three to five days probably. But it does take a little bit longer. We’re very transparent about that because we offer such low discounts, things are going to be sent by truck across the country sometimes.
We try to be very transparent about that before the customer orders so they know what to expect. I think there are people that are not going to wait. They’re going to go to Amazon, spend 30% more, 20% more, even sometimes more than that for that instant gratification and that may not be our target market. Our target market is for people who don’t mind waiting, need to save that money and will wait the extra time to get their product.
Andrew: Yeah. I don’t feel like I am your target market and at the same time I am. The waiting kind of makes it more fun if it’s something unique. If it’s something I could get from Amazon, then I don’t care about it.
But if it’s something unique, then I kind of anticipate it the way I anticipated getting packages before Amazon came into my life–is it in the mail yet? Has it come? What about when you’re buying a bunch of product because you get a great deal like you did on the iPhone cases and you’re just kind of stuck with it. In fact, you told our producer there was a t-shirt you found for $0.25 per shirt. How many did you buy?
Jeremy: I probably bought 8,000, 10,000 of those. There were hundreds of different SKUs. They were graphic printed women’s and teen graphic shirts. Yeah, when we get stuck with stuff, a lot of times we can throw them in as promotional items with orders. We’ll give them out to customers are something free and unexpected, try to surprise and delight them. Sometimes we’ll trash it if we can’t get rid of it. Sometimes we’ll find buyers in bulk. We’ll buy it and then we’ll resell it for a slight loss or breakeven price point. There are always ways to get rid of the product.
What we’ve done over the past two years is hired the right people to create algorithms that can look at past sales history, understand what we’re going to sell through and then really give us a good prediction of, “We only want to keep this product in our warehouse for six weeks. How many should we buy?” We’re getting to the point where we are not buying a lot of product that we can’t get rid of very quickly.
Andrew: How does an algorithm know based on past sales whether a t-shirt that’s never been sold before is going to sell?
Jeremy: That might be a little bit harder, but take, for example, branded iPhone cases. We know if we have a specific brand, let’s say it’s a B-brand instead of an A-brand, that we’ve sold 2,500 in six weeks and we can probably move that many. The holidays are coming up and so we’re going to need double that. So, we’ll buy 5,000, for example.
Andrew: I see. All right. Let’s close it out with this. We asked you in the pre-interview what’s one way you celebrate success and you talked about how you guys are growing. One thing you did was you joined Steve Case’s Travel Club with the kids. What’s that?
Jeremy: Yeah. So, Exclusive Resorts was founded probably 12, 13 years ago. We were one of the original members. Early on it was pretty inexpensive on a nightly rate after you paid your deposit down.
The business model is you have members that pay a sizeable deposit and that deposit goes into purchasing homes all over the world. I think the club owns about 300 to 400 homes around the world and then we have a specific amount of days that we pay for every year that we can use those homes. So, my kids and my family have been around the world. We’ve been everywhere from Paris, London, Mexico, Hawaii, New York, Caribbean. We’ve travelled everywhere using this vacation club.
Andrew: What are these homes like once you get there?
Jeremy: They’re amazing. In fact, we’ll be traveling to Mexico and Puerto Vallarta. The club owns about ten homes in Rio del Mar, which is 45 minutes north of Puerto Vallarta. They’re about 5,000 to 10,000 square feet, four to five bedrooms. They have their own pools. They’ve got their own beach clubs, restaurants. It’s paradise. It really is. It’s unbelievable.
Andrew: You mean restaurants near the house.
Jeremy: They actually have one that’s right at the beach club in Rio del Mar. Great food.
Andrew: So, you have your own house but there’s a restaurant right there so if you need food, it’s there for you. I see. The views from these places are gorgeous. I’m looking at ExclusiveResorts.com. Wow. That does seem like a fun experience. And you get to meet people there or is it more isolated?
Jeremy: Yeah. You meet other members. Most of these people run businesses of their own or have been successful. So, it’s been a great networking opportunity. We did an Exclusive Resorts cruise where they rented out a seaborne ship in the Mediterranean and I was in a pool one day. It was 200 people on the cruise. I was in the pool with the president of McDonalds at the time. His name is Don Thompson. I was with the general from San Antonio. What’s his name? Can you Google that for me real quick?
Andrew: General, San Antonio.
Jeremy: San Antonio Spurs. Go ahead.
Andrew: Avery Johnson?
Jeremy: No. Shoot. What’s his name? I can’t believe it’s blanking on me. Hold on a second. David Robinson.
Andrew: Okay.
Jeremy: So, one of the best basketball players of all time. He had a friend, Max Lucado, who’s probably the biggest Christian book author. I’m just in a swimming pool talking sports and McDonalds and business with these guys and it was unbelievable.
Andrew: I feel like that would inspire me to get back to work. Getting some time to look at the beach or look at the ocean is not enough. But when I see what other people have achieved and I get close to them and I feel like there’s more in life then I realized before, that makes me go back to work refreshed and energized. Has that happened to you?
Jeremy: Absolutely. Yeah. I love talking to people who have successful businesses and sharing stories because that’s really what motivates me to continue and try different things.
Andrew: Me too. And I’ve been loving your site. Really, frankly, these interviews are not about me liking the stuff that the people who I’m interviewing create. It’s about liking the stories or hearing how they did it. I like going through Tanga. Tanga.com for anyone who wants to check it out. I think that’s it. Thanks so much for doing this.
Jeremy: All right. Thanks so much. Yeah. It’s been fun. I really appreciated talking to you.
Andrew: Cool. All right. My two sponsors are HostGator–if you need a web host that will actually take good care of you, go to HostGator.com/Mixergy and Pipedrive will help you close your sales or find affiliates if you’re like Jeremy. Go to Pipedrive.com/Mixergy.
There’s one other one I want to tell you guys about. Search used to really be horrible on Mixergy. We improved it dramatically and we only improved it because we partnered up with a company called Swiftype. You may not have ever heard of them, but if you have search that stinks on your site and you want to update it, switch to Swiftype. They’ve taken really good care of me, which is why I want to say thank you to them. Thank you guys at Swiftype. And thank you to you, Jeremy, for doing this interview.
Jeremy: Thank you very much.
Andrew: Thank you everyone. Bye.
Jeremy: All right. Bye-bye.
