Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and I do it for an audience of real entrepreneurs who are building their companies and, often, returning here to do interviews themselves after they built their companies.
So our very first producer organizes events now. And I went to one of his events and this guy, at the event, said, “What do you do?” and I said, “I interview real entrepreneurs.” And the guy says to me, “Oh, you got to interview this guy who runs a YouTube channel called Watch Me Amazon, and his Instagram. Watch Me Amazon is really big.” And I said, “I don’t think so.” He says, “No, no. The guy’s making, you know, money online.” I go, “I definitely don’t think so.”
And then, I realized, wait a minute, this guy who I was talking to, Stanley Chen, works at a site called PingPong. They do payment processing. Stanley freaking knows who’s making money and how much money. Now you’re nodding your head because he does. And I said, “Do you know this Watch Me Amazon guy’s sales?” He said, “Yes.” “Is he making money from like teaching people how to sell on Amazon or from actually selling on Amazon?” He goes, “Making money selling on Amazon.” I said, “All right. Let me pull up my phone.”
And so I interrupted the conversation with Stanley. I go to Instagram @watchmeamazon, and I see white powder, on a screen, getting freaking chopped up. And I go, “All right. This guy is like going to talk about how he’s spending his money on coke and Lamborghinis. I’m going to cut out.” And then, the video pans out, and no, it’s freaking flour. And he’s got like a warehouse full of stuff like flour that he’s selling on freakin’ Amazon, and that’s his business. His like YouTube thing and Instagram thing is like a side hobby. In fact, it doesn’t look like that polished stuff. You’re seeing like a freakin’ Amazon warehouse, which does not look . . . anyone who’s watching the video right now is looking over your shoulder going, “This is not like get-rich-quick, this is like real-life selling.” Over your shoulder, you’ve got . . . what is that? Like an air conditioner that through a pipe goes out the wall, like it’s going out the wall, out the window.
Larry: So I’m doing this interview from my warehouse. My warehouse is 4,200 square feet in Brooklyn, New York. We are in an industrial area. My warehouse is in the basement of an industrial building. This is my office. Within that warehouse, the pipe that you see going out the window is my air-conditioning unit because it gets very hot in here in the summer. And that’s how we run the exhaust out the window.
Andrew: Yes, this is not like some kind of beautiful . . . this is like the real stuff of selling on Amazon. And you’re selling, you know, basic mundane things on Amazon and largely by flipping them. And I said, “Huh, someone’s actually making money selling on Amazon?” And based on my conversation with this guy, yeah, Larry is.
So the person who I’ve been bringing up here and telling you about, his name is Larry Lubarsky. He is the guy who, on Instagram and on YouTube, talks about his experience selling on Amazon. His channel is called Watch Me Amazon, and I invited him here to figure out whether anyone can actually make money selling . . . well, actually how someone, like him, how he’s making money selling on Amazon, considering how freaking competitive it is. And if it’s worth it, because it’s not glamorous. I got a better looking lifestyle than you, and I’m like [inaudible 00:03:25] San Francisco because all I do is sell bits. You’re selling physical stuff, atoms.
All right. This interview is sponsored by two companies that are wondering, “What the hell’s Andrew talking about?” The first will host your email, will do your email marketing right, it’s called ActiveCampaign. And the second will help you hire phenomenal developers, it’s called Toptal. I’ll talk about those later.
But first, Larry, let’s talk dollars and cents. How much revenue did you bring in, 2018?
Larry: A little over $18 million in top-line revenue.
Andrew: Selling on Amazon exclusively?
Larry: That is correct.
Andrew: Okay. And so how much profit did you get from that?
Larry: Roughly 20% equates to about $4 million.
Andrew: Okay. Profit? Like you get to take that home, put it in the bank?
Larry: Profit, correct.
Andrew: Do you put in the bank, or do you buy more inventory with it?
Larry: No, we buy more and we pay ourselves a nice little salary. We take a little bit of disbursement, but most of it we just reinvest. And that’s how we continue to grow the business. So I would say that the bulk of our profit comes in the way of the inventory that we own.
Andrew: Okay. And let’s go back here. Actually, before we do, before we understand how you got here, what are some of the products you’re selling today on Amazon?
Larry: Just household items. We sell primarily . . . I don’t even want to say “primarily,” because it’s literally anything that you can think of that makes a buck, but it’s predominantly health, beauty, toys, groceries, electronics.
Andrew: Like what? Give me a hot seller right now.
Larry: Just brand-name shampoos, lotions, face washes, Crest toothpaste, mouthwash.
Andrew: How are you getting Crest toothpaste? Doesn’t Procter & Gamble . . . they’re the ones who make Crest, right?
Larry: So you can open up a wholesale account, if you meet certain criteria with Procter & Gamble, and buy products directly through them, buy products directly through companies like Johnson & Johnson, for instance.
Andrew: And so you’re doing that?
Larry: Yes. Or you can either go to the brand directly or you can buy product, brand-name product, from wholesale distributors, wholesalers, middlemen. All different ways to get product.
Andrew: And you just looking to see, you know what it’s going to sell for on Amazon. Can I find it cheaper somehow directly from the manufacturer, from some dude who bought extra, that kind of thing.
Larry: Yes. So the actual business model of what we’re doing is so simple. I don’t want to say that it’s easy because it’s not. It requires a lot of work. There’s a lot of number crunching. There’s a lot that goes into it. But just the overall concept is fairly simple, and we’re looking to buy low, sell high, products on Amazon. We are specifically looking for brand-name products that have already an established customer base, that rank on Amazon, that we can study the sales history and find products that we know are going to sell, so we’ll get the money back that we put into them. And just, you know, two things that we’re looking for — products that we can move that have that sales velocity, that sales history. And then, we see where we can make a buck or two or three.
Andrew: What tools are you using to know what has the right sales velocity?
Larry: So there are a couple of free tools. Well, first of all, Amazon, the Amazon Marketplace has a ranking system. Almost every product on Amazon has what’s called a best-seller rank. And that is basically a rank that Amazon is giving that particular product, letting you know how much that product sells. So there are different categories on Amazon. But if you are looking at a product that’s ranked number one in electronics, for example, that is the number one selling product in electronics. Number two is ranked number two. Number three is ranked number three. But they have . . .
Andrew: Okay, so that’s how you can tell. What else are you using, what other software?
Larry: So I built my own custom software, as most big Amazon sellers do when you’re managing a lot of SKUs and products. But as far as free stuff on the market, we use a couple of tools, primarily Keepa, that does a deep dive into like Amazon sales history, trends, stuff like that, and, you know, different Chrome extensions like the Jungle Scout Chrome Extension, Rev Seller. DS Amazon Quick Labs I believe is another one that we use. Those are primarily the three or four extensions that we use, and the Keepa, and then, it’s just my own software for doing some research and managing my product SKUs.
Andrew: What research do you need to do, or what do you need to create that doesn’t exist?
Larry: Well, there’s a lot of different things in the research space. Like primarily, if you go to, you know, Procter & Gamble, like we spoke about, they’ll give you a wholesale catalog that’s going to consist of literally hundreds of thousands of different products that they sell. And they’re going to give you the price of the products that you can buy from Procter & Gamble, UPCs and stuff like that. So you’re going to get these wholesale lists and catalogs, you know, millions or hundreds-of-thousands-of-products deep.
Then that’s when you get to the not-so-sexy part of going on the Amazon Marketplace worldwide and looking up those products one by one, first seeing which one of them actually have a rank and are popular and are selling. Probably 90% of the stuff that we look at is not popular, no one’s buying it. But then the stuff that is popular and selling, then you have to kind of crunch the numbers, see, “All right, here’s what it’s selling for on Amazon. Here’s how much money you’re left with after all Amazon fees and expenses.”
Andrew: And you need to create that? They don’t have that built into their software?
Larry: No, they don’t. I mean they have a free Amazon FBA Calculator where you can take a specific item, plug it into the calculator, say, “I want to sell this item for $20,” they tell you how much fees they take out, what you’re left with. And then, you can just kind of subtract your net proceeds versus what your cost for acquiring that product is and do the arbitrage that way. But when you get a list of, you know, a couple hundred thousand products to sit there and do it manually, it doesn’t become effective so you have to kind of, you know, scale that to be able to run these large lists fairly quickly.
I would say, right now, in the Amazon third-party software space, there is a bunch of companies that are out there that can take these lists and scan them. For me, I just found it was easier to make my own because I have some other needs as well. But there is, you know, plenty of software tools that can take these UPC lists and scan them, cross-reference them against what’s going on on Amazon, and tell you what’s popular and what’s profitable.
Andrew: All right, let’s go back a little bit. 2012, you were deep in debt after spending how long trying to be a stockbroker, successful stockbroker?
Larry: Pretty much since I was a kid, almost 15 years. So I . . .
Andrew: Why? Why didn’t you do well? I mean you seem like you got hustle in you. You’re smart guy, you’re calculating numbers on this stuff all day. I see brokers who are pretty stupid, as long as they can work the phone, they do well. What was it that wasn’t working for you, considering how smart you are?
Larry: So, in the beginning, I did fairly well. But, you know, it was a commission-based only business. There’s no salary. You pretty much eat what you kill. So if you, you know, close sales and you generate commission, you make money. Months that you don’t, you generate nothing. And I had definitely some good years, I had some bad years, but, you know, there was no love, there was no passion in that business. I got into it kind of chasing the dream of making, you know, a lot of money at a young age. You know, there was really no love or no passion, from my end, in that business. And after, you know, 5 to 10 years of just spinning my wheels, one month I’m making money, one month I’m not, a good year, a bad year, and just the stress of that kind of lifestyle and that type of commission-only sales business, it just wasn’t for me and I was kind of getting burned out from it.
And then, I was jumping from one firm to another firm, you know, just a whole bunch of different reasons. But my heart wasn’t in it really is the main reason why I, ultimately, fail. I, a lot of times, like to think that if I were to go back to the business right now, the hustle, and mentality, and the drive, and energy, and the passion that I have right now for business, I feel that I can make it work. But, at that time in my life, I just didn’t have a love or passion for it. And I guess I wasn’t really mature enough . . . or my mind wasn’t in the right place where I needed it to be because it’s also a mindset, heavy business, you need to have the right frame of mind to do well in a sales type of business.
Andrew: Before you got into e-commerce, after this period where you were . . . being a broker wasn’t working for you, did you try to be a pizza-delivery guy?
Larry: I did, unsuccessfully.
Andrew: You did?
Larry: So it wasn’t my goal to go out and be a pizza-delivery guy, but when I finally hit rock bottom and decided that I just couldn’t even go to work anymore as a broker, it was time to quit, I wasn’t making any money, so I kind of packed it in and said, you know, “I have a ton of debt. I need to start,” you know, “climbing my way out of it.” And I was just looking for a regular job, regular nine-to-five, Monday through Friday, I would’ve delivered pizzas, I would’ve, you know, mowed lawns, I would’ve done whatever. And yeah, that’s the kind of position that I was in where I was literally willing to do whatever just to have a couple of bucks to pay the rent, pay the car, keep my phone on, and just, you know, somehow someway start scratching and clawing myself out of debt.
Andrew: But did you have a daughter at the time?
Larry: I did not, no.
Andrew: This was before you had a child?
Larry: Yes. So I had a girlfriend, at the time, who is . . . things worked out and is now my wife, but it was a girlfriend that I was madly in love with, trying to have a very serious relationship, working towards building a future, building a life, one day getting married, getting engaged. And, you know . . .
Andrew: You thought all that. Larry, as a New Yorker who’s not doing well, how much of a loser did you feel like? Did you feel like, “I’m not making this work”? I just saw you look away as I said that.
Larry: I felt like the ultimate loser.
Andrew: You did?
Larry: Then the story that I was telling you, it’s, you know, I was in such a bad position, financially, and I did not want to admit failure. It just killed me inside to admit it. So I would lie to my girlfriend, borrow money from people, borrow money from one guy to pay back the last guy I got money with and just dug myself into this hole. And, you know, right around 2011, everything came crashing down, all the bad stuff that I did got exposed, my girlfriend kicked me out of the house.
At 32 years of age, I went back, you know, to live at home with my mom, not a dollar to my name, broke. And, you know, after that heartbreak and running home with my tail tucked between my legs, I said, you know, “This is enough. This is rock-bottom. I have to make a massive change in my life. This business sucks, the stock-broking business. I have no passion for it. I got to get out and just turn over a fresh leaf.” And that’s what, you know, eventually led me to fall into Amazon.
Andrew: It started with a customer-service gig at a friend’s company and the friend had an e-commerce site?
Andrew: How much did your friend pay you to do customer service?
Larry: It was 500 bucks a week, 5 days a week, regular nine-to-five.
Andrew: So $100 a day, from nine to five?
Larry: $100 a day, which, at that time, was great because there were literally, you know, probably 6 months to a year before I had even made any kind of money. I was negative going to work those last couple of years as a broker.
Andrew: Wow. And what kind of customer service were you doing?
Larry: So my friend had a brick-and-mortar optical store. And then, he also had a website, his own website, where they would sell eyewear, prescription glasses, sunglasses, stuff like that. And he just needed someone to handle customer service and help ship and keep the orders and, you know, speak to customers on the phone, handle returns, that kind of stuff.
Andrew: Okay. And so you were doing that. You were making a little bit of money. You were starting to understand a little bit about e-commerce. Is that when you discovered Gary Vaynerchuk’s video?
Larry: No, that is not . . . that came a couple of years later. So what happened when I was working with my friend, he, at the time, that he had his brick-and-mortar optical store and he had an eyewear website. He was, at the time, starting to dabble with being an Amazon seller, selling products that he had access to, predominantly eyewear, that he was able to buy from the brands, from distributors because he had the store and he was doing the arbitrage, same thing we spoke about, seeing what glasses can he sell on Amazon to make a quick buck. He also, at the same time, had a beauty salon. So same concept there. He had vendors and, you know, distributors and brands that would sell to him because he had a beauty salon and he was looking at the products that he had access to and seeing what he can sell on Amazon. And he built a very lucrative business for himself in a matter of a year or two.
And right around the time when I came to work for him, things were going good. He said, “You know what? I want to start selling on Amazon UK. I want to branch my Amazon business out overseas. I’m tied up with my stores, with Amazon U.S.” You know, “You’re great friend, you’re hungry. I see you want to make more than 500 bucks a week. Why don’t we do this? I’ll teach you how to do Amazon. You’ll take over the Amazon UK business. We’ll split the profits three ways. It’ll be a little bit of your side hustle.”
So then I said, you know, “Sign me up.” I had never even heard of selling on Amazon before, I didn’t even know it was a thing, but he explained the basic concept to me. He said, you know, “Here’s the assets that we have,” you know, “the vendors, and the contacts, and the distributors that we can reach out to. Let’s see if any of these products make sense to sell on Amazon UK.” I stayed up day and night, worked nights, worked weekends doing that arbitrage. And I built a very nice seven-figure Amazon U.S. to UK business, shipping products from the U.S., selling them in Europe.
Andrew: What are some of the products?
Larry: In the beginning, when we started, it was products that I had access to because of my connections to this guy who . . . which was predominantly beauty supplies because he had the brick-and-mortar beauty store, so any, you know, beauty brand, any beauty distributor, we had no problem opening up a wholesale account with. And same thing with eyewear, he owned the brick-and-mortar optical store so there was no problem opening accounts with distributors or brands in that niche. And we would just open dozens of accounts with dozens of distributors, dozens of suppliers, [doing the 00:17:43] arbitrage on all their products.
You know, we were looking through tens of thousands of items, 99% of them don’t make sense, they’re either they’re not popular, or if they are, there’s no money in it. But we found the remaining 1% or 2% of products that made sense, that were turning over well, had a nice profit, and we were just flipping it and it was just, you know, snowballing into a really big business. That’s how we started. Of course, we branched out to other niches, toys, groceries, supplements, sporting goods, all that kind of stuff. Then, you know, just the same general concept.
Andrew: You use the phrase beauty arbitrage, what was that?
Larry: I don’t mean beauty arbitrage. I mean we were doing the arbitrage, you know . . .
Andrew: That’s it?
Larry: Yeah, we were just doing the arbitrage.
Andrew: Just going in and saying, “What can we get low enough and enough for us to even be able to ship to the UK?” Would you ship it to Amazon’s warehouse in the UK?
Larry: Correct. So we do everything on the fulfillment by Amazon FBA model where we find the products that make sense for us to buy. We buy them. We ship them in bulk to the Amazon Fulfillment Center. And then, this way, when customers place orders, Amazon handles the fulfilling process for us.
Andrew: And then, something pretty bad happened with your partner. We’re going to talk about that in a second. But first, I know that one of the things you were looking to do is do online marketing beyond Amazon. I got to tell you about a piece of software that you got to look into as you’re getting started. Do you know about ActiveCampaign?
Larry: Not too much.
Andrew: No, it looks like you’re not big in this space. The idea of ActiveCampaign is . . . you know you need to have an email list if you’re going to sell directly to people, right? Not through Amazon, but directly. Most email lists are pretty stupid, most email software’s pretty stupid. They say, “We’re going to make it easy for you to collect email addresses, and then, we’re going to make it easy for you to send messages to people.” And that’s it. What they don’t do is make it easy for you to say, “Hey, you know what? There are some people who are clearly in the UK and they speak a little bit differently. What if we speak to them a little bit differently?”
There’s some people who are maybe coming to your website . . . imagine if you had a website where you were selling your own products and you noticed that there are some people who are clearly looking at photos of men’s shampoo. Would you then go on and tell them that you have razors for shaving legs? No, you might tag them, if you are intelligent, you’d have your software automatically tag as possibly being men, and then, you’d send them ads for shavers for men.
That’s the beauty of ActiveCampaign, they make it easy to implement things like that. You can tag people based on what part of your site they’re on, how much of the videos on your site they’re looking at, what they bought in the past, whether they bought or not in the past. And then, you can market to them in lots of different channels.
I always communicate, I always say that they’re email marketing. They do way more than email marketing. But I want you to know the email marketing is done simply with them, and then, they’ll let you grow beyond it. I think if I tell people all the different ways you can market with ActiveCampaign, they’ll just get scared and walk away. And it’ll plug in with every other tool that we use. I used ClickFunnels lately a lot, it’ll work with ClickFunnels, work with Wistia Video, work with just about anything. I shouldn’t go through the whole list. Work with ManyChat for chatbots, the works.
If you’re looking to get into email marketing, you want to do it right. If you want to do smart marketing automation, you want to do it right. ActiveCampaign will make it super easy for you, Larry, and for everyone else who’s listening to me. All you have to do is go to activecampaign.com/mixergy. When you go there, they’re going to let you try it for free.
If you decide to sign up, they’re going to give you your second month for free. If you decide to sign up and work with them, they’re not just going to say, “Here’s our software. Go, use it, figure it out for yourself.” No, they’re going to say, “You know what? Well, [inaudible 00:21:11] a real human being do a one-on-one consult with you where you’ll actually get to use the software. Then, after you use the software, do what this consultant gave you . . . the assignments that the consultant gave you. Come back, have another call. See what’s worked, what didn’t work, what do you do next. They’ll help you. And if you made a mistake and you went with another crappy email-marketing software, they will even migrate you for free.
So, Larry, if you picked an email-marketing company, it’s not too late for you. If you didn’t, it’s not too late for you. All you have to do is go to activecampaign.com/mixergy.
Larry: Yep. So I’m starting to get into marketing. I would definitely check them out.
Andrew: You know what, the reason that I pitched it that way is because I looked you up, on Facebook, and I saw that you and I are in a couple of Facebook groups together, and I saw that you’re asking questions about this. You’re like in the “I want to understand how this works,” mode. Really hungry for knowledge and hungry for partnerships with people who do this well. I like watching the way you think in those little areas. Yeah. Like I even found an article, like a question of yours from half a year ago, on Facebook. Anyway, let’s continue. What happened with the partner?
Larry: As, unfortunately, most partnerships with close friends go . . . I mean the guy that I worked with was a little psychologically nuts, so I can tell you specifically what happened. But to, you know, make a long story short, he kind of tried to fuck me over and squeeze me out of the business, pardon my French.
Andrew: Yeah, tell me what happened. Let’s be specific here.
Larry: So specifically, in my opinion, what had happened . . . so there was two separate business entities, there was the UK business and I was getting a, you know, profit share of that business, I was getting a third of the profits. And the second business entity was his U.S. Amazon business, and he had partners in that business. I wasn’t involved in that business. But, in my estimation, what I believed happened, the UK business was a lot more profitable than the U.S. business. And I attribute that to the fact that I was running the UK business, he was running the U.S. business. I think I was just doing a much better job. And, at the end of the day, when it was time to get paid, I was making a lot of money from the UK business. His U.S. business wasn’t doing so hot. His partners were upset that there was so much money going to me every month. And I think he just kind of wanted to push me out of it, take over it himself and just, you know, kind of try to, you know, just do that.
Andrew: What Stanley was telling me too was that there might have been a bigger opportunity in the UK because the U.S. Amazon store was so competitive.
Larry: Correct. So it’s a little bit of a tradeoff. So a lot more competition in the U.S., on the other hand, there’s a lot more volume, and a lot more sales, and a lot more velocity in the U.S. However, you know, one of the great things about selling from the U.S. to the UK, especially at that time, is, when you’re selling products on the UK marketplace, you’re getting paid in pounds. And the pound, especially back then, was almost 2 to 1, I think it was like £1 was $1.75. So we weren’t selling items for $20, we were selling items for £20, which translated into $35, and we were selling these, you know, $6 to $7 bottles of shampoo, for instance, that were, you know, selling multiple units a day. And, in the U.S., maybe you were making three four bucks on them but, in the UK, you were making, you know, three times that. So it was very profitable.
But I just think I really developed . . . I was so passionate and so hungry and I was working, you know, so much, I really just think I outworked them and just did a better job running the business. Because, you know, at this point in time, I have a U.S. business that does very well as well. But, you know, this guy that I used to work for, he was kind of pulled in a million different directions at once. He’s one of these entrepreneurs that focuses on, you know, 20 to 30 different things without really lasering in on any one specific thing. So, instead of one business that’s firing on all cylinders, he has, you know, 10 to 15 different businesses that are all doing half-ass.
So, you know, I guess there was maybe a jealousy thing where he kind of wanted . . . or I think maybe there was just so much money to be made there where he said, “I can hire someone to do this. I don’t need to give this guy a third of the profits, especially since I’m the one who put up all the funds.” So I don’t really know what it was but it was someone that I grew up with, someone that I considered a close friend, this person was actually a groomsman at my wedding, considered making him the best man. But, you know, you are often warned, “Don’t do business with friends,” and, unfortunately, I was 0 for 2 at this stage, when I became a stockbroker, I went to work for one of my best friends. He tried to screw me over, that relationship went sour. And then, when I got into the Amazon business, this guy tried to screw me over and that relationship soured as well.
Andrew: And so, basically, he said what? When you say tried to screw you over. What was it?
Larry: So he was trying to create an environment where it wasn’t conducive for me to work anymore.
Andrew: Like what? What did he do to make it uncomfortable?
Larry: So we had a . . . I forgot when it was, but I think was in 2012, we had a hurricane that struck the East Coast, Hurricane Sandy. And, you know, it wiped out our office. It wiped out a lot of products. We kind of had to rebuild and start from scratch. He took funds that we had to rebuild the U.S. business. The UK business he kind of put on the back burner. He started taking research that I would do for the UK market and email it to other people for them to buy it with him under the table. Just a bunch of shady stuff. Just a bunch of crap and just kind of . . . he didn’t come up to me and say, “You know what? You’re fired, I don’t want to do business with you.” It was just a bunch of underhanded slimy sneaky [inaudible 00:27:18].
Andrew: How’d you finally leave? When you’re in a situation like that you’re just kind of slowly getting boiled and it’s hard to notice it. Was there an eventual argument that happened that you guys broke free through?
Larry: I missed what you heard because we had a little bit of a bad connection.
Andrew: Sorry, what was it that finally happened? Was there an issue that you finally blew up about?
Larry: It was just a bunch of little things.
Andrew: And you finally said, “I’m done. I’m moving on, I’m going to do my own thing”?
Larry: Yeah. So the final straw was I was sending him purchase orders . . . because he was the one that was handling the orders, so I would do the research. I would say, “Here, order,” you know, “this list of 100 SKUs from the supplier,” or whatever, and he would tell me that, you know, “We don’t really have the money to order it just yet.” And then, I had found out that he opened another Amazon account with someone else, and he was sending my research to them and saying, “Hey, buy this.” And then, when I found out and I called him on it, he said, “No, no, no. I’m doing it for us,” [inaudible 00:28:20] he’s going to help. It was just a bunch of shady immature, you know . . . not the right way to do business kind of stuff.
Andrew: So then, you decided to go off on your own, created an Amazon U.S. store?
Larry: I didn’t decide to. I had no choice.
Andrew: You had no choice.
Larry: I had no choice.
Andrew: You created it, and did you start in the U.S.? No, I think you started in the UK, from what I understand, right?
Larry: I started in the UK because that’s what I knew, that’s what I was doing at the time. I had built, you know, from scratch, from the ground up, a very profitable UK business. I already knew and had relationships with vendors, with suppliers. I knew what products worked.
Andrew: You reached back to those vendors, you started working with them, you went back to Amazon, you created a new account for yourself, and you were doing business on your own. How long did it take you to make more money on your own than you were making when you were with him?
Larry: I would say, about maybe a year or so time. Because I mean I . . . literally, I just had to kind of regroup and open up a new Amazon account, which isn’t that hard, get a new, you know, location to work out of. But because I had the knowledge, I could literally pick up the business right where I left off with him because I already knew the products to buy. So, you know, when I restarted, I kind of just picked up right where I left off.
Andrew: Does he feel like you screwed him? Like you took all the knowledge that you gained when you were working with him, and then used it to create a competitor?
Larry: He would say that but, you know, without delving too deep into his issue. When we grew up, when we were all in high school, there was a group of four of us that were best friends all throughout high school, even before high school. And he has a history of screwing over some of his closest friends. So, from these four best friends, he literally screwed over me, and the other two guys, and no longer talks to any of us. So I’m sure, in his mind, that’s why I alluded to earlier, he’s a little bit of a psychotic personality. He would say each and every single one of us tried to screw him over. He’s never wrong. He’s the good guy in this. I’m sure if you interviewed him, he would say he taught me everything and, you know, screwed me over. But, you know, there’s two sides to every story.
Andrew: Okay. So you are working now on your own, you finally have a thing that works. And then, 2017, about two years ago, you watched Gary Vaynerchuk, and what is it that Gary says that resonates with you, that changes you?
Larry: So I discovered Gary Vee was kind of into the vibe and the content that he was putting out on social media, I was . . . you know, when I discovered him, I was consuming it for a little bit of a while. And there was a video that really caught my attention where he was talking about content creation. And he said, you know, “It’s so much easier not to create content. Creating content is hard, but when you just go about documenting your daily life just,” you know, “making a documentary. Documenting what you’re doing today, what you’re doing right now, what did you do this morning, what do you do for work. That’s a great way to create content.”
And a light bulb went off, on top of my head, and I said, “I’m an Amazon seller. Is there anyone who’s an Amazon seller who’s documenting and doing,” you know, “the same kind of stuff that I’m doing? Is there anyone documenting this sort of stuff?” So I, right away, hopped on Instagram, I hopped on YouTube, I punched up Amazon sellers. And that was kind of my first exposure to the world of, you know, online Amazon e-commerce personalities.
And what I had noticed, at the time, was that there was literally a million and one different people talking about Amazon selling, but it was . . . you know, 99% of them were all Private Label. There was really no one talking about wholesale, or retail arbitrage, or online arbitrage, and no one at all doing anything what I’m doing and actually talking about it. So I thought it would be a good idea to start documenting the life of a wholesale seller, give wholesale advice, stuff like that. And that’s when I started my Instagram and YouTube account talking about a day in the life of an Amazon wholesale seller.
Andrew: I’m looking here at my monitor, right there, because I see a picture of you and Gary Vaynerchuk, in his office, each of you has an arm on the other’s shoulder. What was going on there? This was a couple of months ago, you were in his office?
Larry: Yeah, so I had met Gary a couple of times. There was one time when I first got onto social media where I had won a contest to shadow him and spend the day with him in New York. So I went and did that. And then, this last time, was a barter deal. So Gary has a lot of different ventures that he’s doing and, in this particular case, he was launching a new K-Swiss sneaker of his. And he had an author for someone who was . . . you know, who wanted something in return from Gary or, you know, you buy 25 or 50 or 100 pairs of his sneakers, you get his time in return, or a meeting in return, or a party that he was hosting exclusive for the people that bartered with him.
So I thought to myself, “Buy 50 pairs of K-Swiss sneakers, flip them on Amazon. I’m not going to make any money on them, but I’ll get back,” you know, “75 cents, 80 cents on a dollar. It’ll cost me 5 grand, I’ll get back $4,000. And, “You know, this $1,000 is going to get me a private one-on-one meeting with Gary Vee.” So the return on investment for that was good. I had some other projects and irons in the fire that I wanted to get his opinion on. And just that’s kind of how I got my foot in the door for that.
Andrew: He had his own sneakers?
Larry: Yeah, Gary launched . . . he’s already like on his third or fourth different K-Swiss sneaker.
Andrew: K-Swiss . . . I had no idea. Okay, so what did you learn from talking to him?
Larry: Well, one of the main things that I learned . . . I initially, you know, my goal for when I started doing Watch Me Amazon, on social media, you know, I saw so many different people offer, you know, so many different “Amazon gurus” selling courses, selling information, claiming to teach how to sell on Amazon. And most of these guys were all frauds and fakes, you know, 99% of them don’t sell online themselves. And I had the idea to kind of, one day, you know, make a wholesale course, make a course for people who want to do the same type of business that I do.
And the most important lesson, that I learned from Gary Vee, was the, “Jab, jab, right hook,” approach. And what he meant by that is, before you ask for something, before you just hop on the scene and put out an Amazon course, why don’t you jab and provide value for an extended period of time? And then, when you actually have a product, or a service, or an ask to sell, then you can hit people with the right hook. So I spent over two years now, I think, since I started my social media and just, you know, documenting, and giving value, and teaching people how to sell on Amazon, and doing Q&As on YouTube and instructional videos. And just patience, you know, just patience. I don’t care if I . . .
Andrew: Since you’re you talking, teaching, “Here’s how I buy, here’s how I sell,” that kind of thing, what’s the most popular lesson that you’ve taught?
Larry: Patience and hard work. So I think most people . . .
Andrew: More specifically, that’s not unique necessarily to this. When people want to know something that’s unique to selling on Amazon, what’s one thing that you teach them?
Larry: So the reason I say, “Hard work,” is because a lot of people try to push this business off as passive income, as, “You want to live a laptop lifestyle. You can be an Amazon seller by working two hours a week on your laptop from a beach somewhere while traveling the world.” You know, the number one thing that I try to do with my content is make it clear that that is not the case. This is a real business. It is a lot of hard work. It takes time. It takes blood, sweat, tears, dedication. It is no different than opening a retail store, or opening a restaurant, or it’s something that’s going to take a lot of time and a lot . . .
Andrew: Okay. Let’s say something buys into that. What do they need to do that they don’t know? How do they get started?
Larry: So you need to have a general understanding of how the business works, what selling on Amazon is, the whole ranking system, how much Amazon takes from their fees. All that kind of stuff. And then, you have to have a legal-business entity, you have to, you know, incorporate, you have to do all that kind of stuff to make yourself an actual legitimate business and not just someone selling, you know, stuff out of their garage. Once you do that, you have to just, you know, create a system for reaching out to tons of different distributors, wholesalers, suppliers, brands direct, manufacturers. It’s a numbers game, you just have to reach out to dozens, and hundreds, and thousands of different distributors, open wholesale accounts. You’ll get catalogs, you’ll get, you know, price lists. And then, you have . . .
Andrew: And just keep looking and hunting for those cheap products that have high demand?
Larry: High demand and make a profit. And the reason why I say, “Hard work and patience,” because, literally, I can get a list of 100,000 different products, maybe 3 will work, 5 will work, 10 will work. You might open, you know, wholesale accounts with 20 different distributors, maybe only one of them will be a good viable one that you can do and generate some nice business with. So it’s literally a numbers game. It’s a lot like being a stockbroker and doing telephone sales, in that way, where, you know, how much you make is predicated on how many numbers you dial, how many people you pitch, how many presentations you make. The more you make, the more you’re going to, you know, get.
Andrew: Okay. I want to come back and ask for a little more details. First, at some point, Larry, you’re going to want to get something developed. I want you to hear about my sponsor, it’s a company called Toptal. You might decide, “Hey, you know what? Maybe teaching is not the ideal way for me to make money in this space. Maybe it’s creating a plugin.” Like what was the . . . the jungle tool that you mentioned.
Larry: The Jungle Scout.
Andrew: Jungle Scout. I interviewed the founder, I know the company well. You might say to yourself, “You know what? I might need a plugin. If I had this ideal plugin, if anyone had it, this would work really beautifully.” Well, in that case, you think, “Well, I’m going to go and hire somebody to go and do this.” You go to one of the cheapo sites online and you end up with cheapo service that actually doesn’t really work. Or you go to Toptal and you say, “I need the best of the best developer. Here’s my idea for the plugin, here’s who’s going to look at the code and make sure that it works well. Here’s how we’re going to actually execute how much time I need, how many people I need.” Boom. You . . .
Larry: What’s the name of the website?
Andrew: It’s called Toptal. toptal.com. Top as in top of your head, tal as in talent. And what they’ve done is there are people who just will have like products that they need internally, Toptal developers will code it. Or side projects that they don’t have enough time to build because their developers are working. They go to Toptal and they end up getting a Toptal developer to do it. Or sometimes they’re agencies, you work with agencies a lot, you hire them to build your app for you. You don’t know, a lot of these agencies they just hire Toptal people. It’s just like a couple of people in an office. And when you need an iPhone app, they go to Toptal and they say, “I need an iPhone app.” When you need a plugin, they go Toptal. Anyway, you might as well just go directly to Toptal.
Anyone who’s listening to me who wants 80 hours of Toptal-developer credit when you sign up and pay for the first 80 hours, in addition to a no-risk trial period, this is unique. No risk on hiring a developer, best of the best. All you have to do is go to top, as in top of your head, tal, as talent. It’s toptal.com/mixergy. Toptal.com/mixergy.
Larry: So I actually wrote the name down because I need something developed and I’ve had horrible experience finding people on Upwork to develop stuff. So I’m definitely going to check them out.
Andrew: Yeah, this is a complete world apart. Upwork’s going to get you the super cheap . . . This is no longer an ad, so please, Toptal, don’t get pissed at me for talking about how your competitors suck. But Upwork is just really good for cheapo service for people who have a lot of patience to go through it but don’t want to spend a lot of money. When you need like the best, that’s not the place to go. Yeah, when you started out going on Instagram and posting, what was your goal? Was it to, eventually, teach or what were you trying to do?
Larry: My goal to be 100% honest and transparent was to, eventually, teach. Now I enjoy the business, I love helping others who were or are in the same position where I was, you know, a couple of years ago before Amazon changed my life. So I enjoy it. But my main goal was to monetize it eventually, either through some sort of consulting, or through a course, or something like that.
But again, going back to the lesson that I got from Gary Vee, you know, I felt that I would be much better off not rushing it, jab-jab-jab, just documenting my life. And I think that when people go and check out my social media and see, you know, two years’ worth of real work, of warehouse employees managing the staff, you know, logistics, dealing with product, you’re verified, you’re legit, you’re not someone who is selling courses about selling on Amazon but who doesn’t really sell on Amazon. So I think the one thing that sets me apart on social media, from a lot of the, you know, quote-unquote, e-commerce personalities is that I am very big on, you know, talking the talk and then actually walking the walk and, you know, teaching what I do for myself.
Andrew: Yeah, one of the videos that stood out, the one that I mentioned earlier, that you posted on Instagram, that looked like it’s cocaine and you’re cutting it out with like a credit card or something, and then, you pull back and it ends up being flour that you sell and you have a ton of it. That was interesting. But I even liked where you speed up four hours of work, showing what it’s like for your team when they’re taking three packages, putting each of the three packages in a bag, and then going on and doing another three boxes, putting it in a bag, so you can sell a package of three of whatever that is, I don’t know what it was, toothpaste or eyeliner. I don’t know what it was. That kind of thing showing, in 10 seconds, what you guys do all day is fascinating.
That is what Gary’s talking about when he says, “Don’t try to create new content, just document what you do with your content.” I wonder though about you because it’s still a lot of work. That’s not that much work, you just put a camera on and you zip it up but . . . I mean and you speed it up but there’s this one where you say, “I’m about to do this online, on YouTube . . . ” I think it might have been your first YouTube . . . And it’s got nice production value, like the music, the beat, the speed, the whole thing. Who’s doing that and how much time are you spending doing it?
Larry: Yeah, so I went on Upwork and I found someone who would do a little bit of video editing, just polish it for me. And the easiest way for me to make content . . . and I don’t make a lot, I mean Gary said you’re supposed to make, you know, four or five pieces of content a week. I’m lucky if I make one or two pieces of content a month. But, you know, I would make one or two educational YouTube videos, and then I hired someone to take that video, cut it down into a 1-minute clip, 30-second clip, so then I could repurpose it, you know, for Facebook, for Instagram, and just have more content to produce.
Andrew: Okay. So it’s not that much of a production department? It’s just you basically speaking into . . . from what I’ve seen, it’s three things that you do, gets attention. Number one, you’re just speaking into the microphone, into the camera. Right? Number two, showing what’s going on. And it’s like the most mundane stuff, but because it’s like . . . the way you present it, it looks cool. And the mundane stuff is like somebody packaging, somebody unloading a freaking box in a video. And then, three, it’s like hustler messaging. So it’s you with a T-shirt that says, “Hustler,” on it. Or I love the one where you had a bat with spikes on it, and I think it’s [Hustler 00:44:13] Amazon on it. You know? It’s like stuff like that, like you’re working hard and you’ve got a nice visual for it.
Larry: Just following me. I mean I’m not super-creative, if I had to . . . like for me, making content is hard, it doesn’t come supernaturally. Like if I’m making a YouTube video, I’ll spend, you know, days trying to script everything out and I’m very anal. You know, I’ll do like a dozen different takes. It doesn’t come easy to me. But what comes easy to me, you know, like Gary said is, “Don’t create content, don’t focus too much on trying to create something that looks nice. Just document your day-to-day stuff.” So the mundane stuff, the packing, and the prep work, and the type of stuff that we do here in the office on a daily basis, that’s the easiest stuff for me to film and put out there.
Andrew: Who helps you think through the way that you present the videos? Like, in that one intro, the first video that you posted on YouTube, it’s you showing your day, a high-speed version of your day, and then, you slowly, in black and white, looking at the camera, and then, you start introducing your message and start talking to the camera. Is that you thinking that through?
Larry: No. I mean I’ll just record . . . I’ll have a general concept for a video that I want to talk about, like I think that example was like a brief tour of my warehouse, so I’ll just record the content. Don’t have any production team, you know, I’m either holding the camera myself or I have a tripod that I’m putting the camera on. I don’t have anyone following me around, or filming, or anything like that. And then, I’ll just take that content to the film editor that I have, and he’ll make like four or five different intros. I’ll chop it up, they’ll send me a bunch of little clips, and I’ll say, “This one’s nice, this one sucks. This one’s nice, this one’s good.” You know, pretty simple on that end.
Andrew: The money that you needed in order to start buying inventory came from where?
Larry: So when I had the falling-out with the one guy, that I started working with, and I was, you know, ready to branch out on my own. I had all the knowledge, the experience, the connections, the products. The only thing that I was really lacking, at that time, was the capital to start. So I was looking to take on an investment from one of my friends. Again, you know, I didn’t necessarily want to do business with friends, but I kind of had no choice because I didn’t have a lot of money saved up at the time. I had just got married, I had a nice wedding, kind of back to square one. But one of my friends knew what I was capable of and believed in me. So he put up 50 grand for an equity stake in the business, and he would also be a working partner. And then, together with that $50,000 investment, that’s how we started the Amazon business and grew that from . . . this was in 2014, and grew, with that 50 grand, to the business that we still have today, till this day.
Andrew: And what’s the equity split between the two of you?
Larry: It was 50/50.
Andrew: 50/50? Still is?
Larry: Still is.
Andrew: So you still are back with the friend?
Larry: Yes, not that friend . . .
Andrew: Not that one and not the stockbroker friend.
Andrew: This is a third friend.
Larry: This is a third friend.
Andrew: You guys have anything written down?
Larry: I mean it’s 50/50. We have it written down. It’s, you know, haven’t really been any big issues so far. But, you know, so far so good.
Andrew: Now that you’ve made some money, you don’t want to go to a lawyer and say, “Look, let’s just write out what happens if we’re not happy with each other, what goes on if we are,” and . . .
Larry: Honest, no. But, you know, what would happen if we are unhappy with each other, we have, you know, enough loot in the business where, if we needed to, we part our separate ways. There’s a lot of money to divide right down the middle. And if it ever got to that, that’s what it would be, and then, we would all just . . . you know, I’ll start my own business, he’ll start his own business, it’s no big deal. But yeah, we . . .
Andrew: Can you start from scratch? It’s not like you have any brand equity in the Amazon company.
Larry: Yes, correct. So I can start from scratch because I’m dealing with over-the-counter products, these same kind of products that people have access to. Now, I have . . . you know, a big part of this business is dealing with people and building relationships, you know, with brand owners, with sales reps, with manufacturers, with actual people. You know, building relationships with people goes a very big way in this business. So I have those relationships, and those relationships are super-valuable, but those relationships aren’t linked to a brand, they’re linked to me. So god forbid something happened to the business, you know, the relationships would, you know, stay with me I’m pretty sure.
Andrew: Okay. Yeah, I would imagine that too. So let me ask you this, do you want to partner up with me? I’m not a friend of yours, which means you’re going to do better. I’ll take 25% of the business compared to the 50.
Larry: So I get, you know, a lot, a lot of offers for that all the time. I get a lot of offers. But no, this guy lucked out, you know, because he put up the 50 grand but he has made, you know, 100 fold.
Andrew: And you take the money out of the business? Do you have money in your personal account right now?
Andrew: So if I asked you, and I’m asking you right now, to do a screen share, show me what’s in the bank account. You could log in, and then, show me that you have over a million in your personal bank account?
Andrew: You can. Let’s do that. Once you log in, don’t share the screen until you’re fully logged in . . .
Larry: Not going to do that.
Andrew: Let’s see the bottom-line number. Why not? I could do it. But I could show you our account.
Larry: Don’t want to do it.
Andrew: Why not?
Larry: Don’t want to do it. Well, first of all, like I said, the majority of the money is put back into the company. So even though there are nice profits, we don’t take, you know, millions of dollars out and pay ourselves millions of dollars. It’s usually a small percentage, a small salary. And then, the way that you grow in this business is taking the money that you have and just buy new product. So I’ll give you an example. When we started with 50 grand worth of inventory, you would buy 50 grand, you would sell it to Amazon, send it to Amazon. It would sell, let’s say, that 50,000, when it’s sold, came back as 70.
You would then take out the 20 and put it in your pocket, and then, spend the 50, you would buy 70,000 worth of inventory. That 70,000 would come back as 100. You would, you know, just snowball that money. And that’s kind of what we did. And still, till this day . . . you know, in this business, one of the main constraints for people, if they really want to grow, is having the funding to buy more and more product. Every time you want to grow, every time you want to scale, every time you find a new distributor, or a new wholesaler to buy product from, you need to come up with capital to fund those purchases. So everything, for the most part, gets reinvested back into the business.
Andrew: Okay. But still, why would you feel uncomfortable showing me your bank account?
Larry: I just don’t want to log into my bank . . . it’s a weird question. No one’s ever asked me to do that but you.
Andrew: I guess what I’m looking for is just some kind of proof that this is what it is, that we’re not just being snowed, the way your wife was, when she was just your girlfriend and you were trying to show her that you were doing better than you were, as a way of winning her over, because, later on, you . . .
Larry: Well, I constantly post proof all the time, screenshots, and log into my account on social media all the time, I have posted videos of it, and can continue to do so. If you want, off the air, when this is not recorded, I can send you tax returns or whatever, if you don’t want to publish it. That’s fine. I actually filmed something for CNBC “Make It,” they were in my office last week. When they were here, they wanted me to log in and verify my Amazon account and all that kind of stuff.
Andrew: And you would do that with me afterwards, after we’re done?
Andrew: So, if it’s just you and me, I turn off the recorder, you would show that?
Andrew: Okay. I don’t want your tax records. I do see that you’ve posted things like your sales summary, a screenshot from . . . I don’t see, I guess it’s from Amazon site, you’ve posted a screenshot of your 30-day sales. At this point, it was $1.482 million in sales, 7,075 units. And then, you didn’t ask me anything, in the chat, and that got a bunch of attention. So you do that kind of a thing?
Andrew: All right. Do you get a lot of people like me who are incredulous, who say, “Well, is this really true?”
Larry: No, I mean yes, yes I do. And that’s kind of the reason why I started this thing was because, you know, 9 out of 10 people who were talking about Amazon didn’t actually have the credentials and the real business to back it up. So I’m all for transparency and, you know, I’ll even say that it’s easy to fake a screenshot but, you know, I’ve gone into Seller Central logged in, live, refreshed my screen, refreshed my sales history. I’ve done that all the time, you know, that’s no problem. No one’s ever asked me to see my personal bank account, so that’s a little different. You know, but yeah, I have no . . .
Andrew: No, so if I would ask you to show me your Amazon like log in, that stuff you’d feel comfortable showing?
Andrew: Oh, okay. All right. Why don’t we do that then, and then people can see us do that? Do you own watchmeamazon.com?
Larry: I believe I do. It’s not active, but I think that was one of the domains that I bought.
Andrew: Yeah, I was trying to figure it out, but that one’s like . . . it’s privacy-blocked. All right, let me close out before I see that one more thing. I feel like your Instagram is surprisingly captivating, considering the business that you’re in. What have you found that works for you on Instagram? Not just captivating but you get a lot of likes. Like it’s you and some dude, standing next to each other, and you get a lot of likes. What is it that you found that works for you to get people to pay attention to your Instagram?
Larry: So I think it’s kind of just like that hard work thing, in a sense where, you know, I’m not new to Instagram. I’ve been on there for two years. I’ve never, you know, bought any followers or run any kind of ads or anything like that. You know, what little growth that I have, has been kind of organic. And the majority of the people that do follow me are real accounts, the majority of which are eBay sellers, Amazon sellers, and just real people that actually have an interest in this kind of e-commerce content.
Andrew: But I feel like it’s more than that, I feel like it’s more of the creativity, like you’ve nailed a couple of things that work.
Larry: Well, I’m flattered that you are saying that.
Andrew: Yeah. You know what? I’m surprised that I’m saying it. But I am. All right. For anyone who wants to watch your stuff, they could go to @watchmeamazon on Instagram, Watch Me Amazon on YouTube. And because of Gary Vaynerchuk’s advice and based on Gary Vaynerchuk’s advice, there is a website coming soon. What is that website going to be? I saw it. I got it on one of my tabs here.
Larry: It is going to wholesaleacademy.com, wholesaleacademy.com. And, in the meantime, to see what I do, you can follow me on YouTube at youtube.com/watchmeamazon or Instagram @watchmeamazon.
Andrew: Cool, all right, before we close out. Let me let you log in, and then, share your screen using Zoom, and we’ll ask Arie to find a way to post it.
Larry: So no, I don’t want to post.
Andrew: Oh you’re saying I can’t share it, but you’ll share . . . all right, you’ll share that with me . . .
Larry: Yes, I’ll show it and I’ll verify it with you. But, you know, one of my concerns is I don’t like to . . . you know, I want to be very careful not to expose the name of my different storefronts, you know, that’s kind of the hesitance for that. But . . .
Andrew: Okay, I’ll keep it private. Well, say goodbye to everyone here. And then, it’ll just be the two of us. And then, I’m going to go rush out to go on a date with my wife. So thank you all for listening. Larry, thank you for doing this. Thank you to the two sponsors. Email marketing done right, activecampaign.com/mixergy. And if you want to hire the best of the best developers, when you’re ready for the best, go to toptal.com/mixergy. Top as in top of your head, tal as talent .com/mixergy. I’m going to go look at the numbers. Bye everyone.