In this episode of the Domain Magnate show, Michael chats with Ronnie Teja, the Founder of Branzio.com They discuss the current state of eCommerce in the digital world and how to manage an 8-figure business.
GUEST BIO:
Ronnie Teja is the Founder and CEO of Branzio. He currently owns and operates this flourishing eCommerce business that focuses on selling watches among other niches that are still moving for expansion today. He has been doing business from the time he moved to Canada in 2008 and has been trusted in the field ever since. With over 15 businesses on hand and a remote team of 30 people, Ronnie has his hands full on managing the company and continues to grow businesses to this day.
Connect with Ronnie: Email | LinkedIn | Twitter | Website
SKIP TO THE GOOD PARTS:
- 0:10 – 1:02 Michael and Ronnie talk about his role in business
- 1:03 – 2:37 Ronnie shares how he manages his goals
- 2:38 – 4:44 Where did these companies come from?
- 4:45 – 6:56 Ronnie recalls the best deals he’s made
- 6:57 – 9:40 They discuss the approach to buying eCommerce businesses
- 9:46 – 23:21 Onboarding new businesses
- 23:22 – 29:44 How business is growing currently in this time
- 29:45- 44:39 Strategies on managing Ronnie’s eCommerce business
- 44:40- 47:02 Ronnie recounts his favorite travels
- 47:03- 48:18 Advice on eCommerce due diligence
SHOW TRANSCRIPT:
Michael Bereslavsky 0:10 Welcome podcast listeners. Today we have Ronnie Teja, who runs multiple eight-figure eCommerce businesses. Hi, Ronnie, how are you?
Ronnie Teja 0:21 Hey, buddy, what’s going on?
Michael Bereslavsky 0:23 It’s good. So tell us a little bit about your business. What do you do?
Ronnie Teja 0:30 Yeah. I run a few different eCommerce businesses and the direct to consumer domain so I can see my pages are mainly just basically focused on watches. We have secondary niches…everything else a watch company sells web service and flow. Hopefully, our focus is to expand to one hundred countries by the end of this year.
Michael Bereslavsky 1:03 Awesome. One hundred companies, that’s a lot how can you manage so many at the same time?
Ronnie Teja 1:10 It’s 100 countries, not 100 companies. But right now, yeah. But if you were to say talking about 100 companies, I mean, I don’t know. I mean, I think 15 is more than enough for me. Yeah, that’s a lot. But, you know, coming back to what you were saying, you know, 15 companies is a lot, but it all depends on who you have and how you actually manage your time between the companies, right. So in each company that I have these companies that we are hosted, we actually have a manager who manages the site. So if you have content site then we have your content site manager, if you have an eCommerce site, we have an eCommerce site manager, and all goes back to our directors of marketing directors of revenue directors of management, and, you know, an implementing iOS as a system to actually improve your management style, especially in a remote team like ours, where we have 32 to 35 employees. And, and you know, and of course, we always increasing. You know, hopefully, our goal is to reach up to about 50 people at the end of the year, given that there’s a lot of talented people who have been laid off during this COVID due to COVID. So we actually what we’re finding out is like in a pipeline for recruitment, we are getting a lot more talented people coming down the pipe wanted to want to work in a very remote and distributed environment. So therein lies the opportunity for eCommerce businesses, if you would open up eyes and look around us. I believe that there’s a lot of those employees and a lot of those people, you know, hanging around who are looking for those opportunities.
Michael Bereslavsky 2:38 Yeah, absolutely. I’ve noticed the same as well. It’s the best time for hiring now because there are many people who are looking for remote jobs. And so how did you end up acquiring so many companies? Have you bought them or have you started them or build them originally?
Ronnie Teja 2:58 Well, the first, the first couple of ones actually, I bet from scratch. So you know, we scaled from, say zero dollars to by the end of the job already making about a million dollars. So cut both of them at the same trajectory. And this was about six years ago. And from there on out, we actually said, hey, look, we said, Look, instead of actually starting a business from scratch, you know, trying to scale them each time. It’s a learning process. And it’s great, but it’s all it’s very exciting. But the downside is also that what you’re faced with is all these challenges of you know, starting everything from scratch, getting a team going, blah, blah, blah, blah, blah, right? So we actually said the second time around, we’re actually going to look at companies which say, have a price point of between zero dollars to $150,000. And we’d be more than happy to acquire companies within that range, right? So our job was okay, we see that these guys actually have a pretty decent eCommerce business, we’ll take their business and we’ll just push as much money as we can behind it to actually scale it as quickly as possible. So the last few companies that we acquired, you know, when we acquired 150 thousand, then we acquired another one for quarter-million dollars, and we were able to successfully scale the boats to about, you know, two and a half million dollars in a year. So it actually worked out a lot quicker than, say, starting from zero dollars. And then, you know, going through the process of sourcing everything, you know, getting everything, getting all the tech stack set up getting all that other things set up. So basically, what you’re saying is, we have a, you have a machine, right, we have a process, we have all the systems, we have everything in place. And what we’re doing is we’re trying to see what business fits our machine the best, right? We just don’t take any other business and say, oh, we’ll take this business and we’ll scale it. No, that’s not how we operate. We operate in the midst of saying, look, this is a these are the niches that we would most prefer to work with. And if we find businesses within that particular niche, then you say, Okay, look, we will take it and we’ll scale it as quickly as possible. Yes.
Michael Bereslavsky 4:45 That’s a great way to look at it. So what kind of deals Have you done what was like the biggest what’s the average size deal that you do when you buy this?
Ronnie Teja 4:54 Well, like I was saying, I mean, ideally most of the deals that we would look should be between like 10 to 150 thousand dollars. But in some cases, we’ve actually found some really, really good. Like we had acquired a sunglasses brand. I would say about six months ago that was about valued at about, you know, $250,000 or 175, you know, 160 thousand euros. And we said, Look, you know, the branding behind what they are, you know, it was an economically sustainable brand. There were glasses that were lbf made with recycled ocean-based, right? And we said, Look, this is a good fit for where our company is going and where we want to be, you know, we want to be a cost base. All of our companies have a cost-based angle to it, right? Because if you’re not thinking about causes, if you’re not relating to people, you know, on an everyday basis, you don’t want to be a fat cat at the end of the day, who’s smoking a cigar and saying, Look, just give me your money. Don’t worry about anything else, right? Every business that we have, has a cause associated with this. Our watch brands, about 10% 15% of our yearly profits goes towards saving the elephants globally. elephant poaching, against for poaching. The sunglasses brand, for example, you know, 10% of our yearly profits go towards helping recycle ocean waste. And we actually use an ocean waste ocean plastics to actually manufacture glasses. Right? Our software business donates about 100 to 1000 laptops a year in India and Africa, along with about, I believe the last month we had was about 15,000 licenses, globally for, you know, for software. Could be windows could be office could be Adobe could be whatever, right? So we actually are pre-printed on that sense. So we look into things like that. So in terms of course, if you’re talking about of course, like I said, you know, 100, 150 grand, 200 grand, 300 grand, it doesn’t really matter. It’s all about what the best fit is and what the causation is of how they actually come into the company.
Michael Bereslavsky 6:57 That’s great. And how do you base the buying decision? How do you evaluate them, do you? Are they? Are they all profitable? Or do you just look at revenue? Is it a multiple of profit? How do you approach that?
Ronnie Teja 7:09 Well, unfortunately for eCommerce, it’s always you know, it’s always your multiple is always going to be a multiple of net, you know, for evil until unless you have like an amazing email list. Yeah, you have a very sticky product like a repeat purchase product, you have you know, and I like like a say like a protein brand, right? When you make your own made to order protein powder and it comes into the subscription model, it comes to you, you know, disoproxil, this protein powder at your doorstep every month that we could, you know, evaluate that to like 12 X or 24 X of their monthly revenue, for example, right? But something which is like say only a one time purchase, like it’s just you just come in you purchase it once and then you’re not going to purchase it for the next like six to eight months. Those usually I would say is it safe to assume that your multiple should be about to you know, 1.5 to 2.5 x attribute that valuation, of course of net. The only people I know will get a gross is like, you know, people who get a gross, this guy, a guy who basically a better brand. Right? So there’s a guy Moyes Ali who basically sold native deodorants to PNG, I think for about 100 million dollars. And you know, his story was basically saying he created a very sticky product, the brand, the brand evaluation, the brand reach of PNG, of the deodorant versus PNG students was about 13% or 10% of consumers who walked into a supermarket to a Walmart or Target or to any of these markets, basically knew their deororants, right? So when you reach that scale, and an average of 30 million, and people are constantly reordering that product at people on a subscription box model, I mean, of course, you can afford to sell your brand for a million dollars, right. So it depends. It always depends on those kind of features.
Michael Bereslavsky 8:54 Yeah, that’s a great place to be. So then how do you usually find these deals? Do you work with brokers Do you do outreach? You picked up the friends and buy from them?
Ronnie Teja 9:05 Yeah, most likely, it’s a friend of a friend most likely, it’s like, you know, I’ll hear about it. Like, for example, I heard about it from you all heard about it from Justin around or I’ll hear about it from different people, so but most likely, you know, I’ll approach people and hear it, like hear it from a third party. In some cases, I believe that marketplaces could be overvalued. Right. So it’s always good to have like a private broker who could actually help you out with that because you know, if you go through I mean, you know, no offense to third party sellers I think it’s the model works and it’s great because they do all the reading for you they do everything else for you. But my thing is also that you know, before you even get into bed with like a marketplace to say, hey, how much should I be buying this business for? I think what do you need is a evaluated right so there’s people out there who is evaluating this business, you pay them 1000 bucks and they say oh, And then the guy CPS said you all these books, and then based on that, I mean thousand bucks, right? And they actually send you and say these guys will actually, in the end, the day and company, look, we’ve read the books, we think something’s dodgy. I mean, we had a business like this about two months ago. They’re like the books are not an order this business is extremely dodgy. I don’t think it’s a good buy for you, which is fantastic. Right? So it’s like, so I think it’s better to spend $1,000 upfront to know the you know, what business it is and what you want to get into basically.
Michael Bereslavsky 10:27 That makes sense. And then what are some of the first things that you do after you buy a new business? How do you quickly improve it? Or put it into a system.
Ronnie Teja 10:37 Well, yeah, of course, I think the first thing is we actually have an intake person who actually within our business who actually looks at of the business and says, hey, look, this is the system they have, this is our system, and basically for the next, next like 30, the first 30 days is all about integrating. If you decide to keep the team then that’s what integrated the team into our into organization. If they don’t, if we decide to keep the team then it’s all about taking the processes and putting our process on top of it right i mean it takes a while for everybody to understand it but most of our team because we extremely fluid I mean we have a customer service agent or a marketing guys they can be given any task so, for example, you can go from you know selling watches, is the other to be selling, you know doing email for like, you know, something else. The other we don’t actually welcome any price either. So fluidity is the name of the game in the business.
Michael Bereslavsky 11:35 Yeah, that’s important. And in terms of the source sources of traffic source of sales, do you look for a particular model or are you kind of agnostic if they are just getting sales from Amazon or from SEO from fake traffic.
Ronnie Teja 11:50 I’m quite gnostic dude. Honestly, I mean, if there’s a person who actually gets a lot of sales from SEO on YouTube, no problems we’ll take, we’ll buy that business immediately. And we’ll take that It we will scale it right because they are being paid. The one that I’ve you, of course, a bit scared about where I think it’s like if he has Amazon businesses, because I’ve actually had a conversation with a few people about that. I mean, Amazon’s a good source of traffic, Amazon’s a great source of business for sales. And especially like in the US, and certain countries like Canada or the UK or Europe, even that people think about Amazon, people trust Amazon, people trust Amazon more than your ecommerce stores, right. But what you’re doing is you’re letting go of about 25 to 35% of your margins straight off the background, plus your marketing spend so roughly 50%, right, that classically, you put your cogs in there, which is you know, so you end up making between 15 to 20%, on Amazon, where a lot of people are, what a lot of people should be thinking is how can you actually take the customer from Amazon and get them back your econ store. So for example, if you’re selling a subscription box, or something, we give people a good taste about your product, and then you give them a reason to come back. He comes through so for example, it could essentially be like, hey, so for example, if I were to sell a watch on Amazon be like, Hey, you know, you can get a warranty card and you say, hey, please do just x y z warranty on on the ecommerce site, right? Tell us your model number, etc, etc. So that two years later, if you needed the watch, or if something breaks, you can send us the old one. And we’ll replace it for you for free. So that actually gives users a reason to actually come back to your website, register, give us all the data, which Amazon is never gonna give us. And, you know, and make them convert on your site. So now you’ve got a very ferocious and loyal following, which Amazon was never gonna give you before. So it completely changes the dynamic. Coming back to your you know, your your question about different traffic sources, I made a YouTube’s a great traffic source. Google’s always great. I mean, I have nothing but great things, you know, but the only thing is, is like Amazon is like iffy, right? So because of, you know, if Amazon grows, it’s the Google to write or an Amazon or wrote our new algo change. They want you to To spend more money on paid traffic, you’ve got all these unscrupulous Chinese factories who are looking to dis you undercut us. We’re looking to do all that. And I think it’s a it’s a bit of a different game. And the only way to succeed that game is you know, there has to be a lot of under the table things at all.
Michael Bereslavsky 14:19 Yeah. And then how what are your team the best at? Are you guys good at everything in terms of marketing and traffic sources?
Ronnie Teja 14:29 Our main focus is Google and Facebook ads.
Michael Bereslavsky 14:35 Hmm. So it’s mostly paid traffic?
Ronnie Teja 14:39 Yeah, we’re extremely good at paid traffic, I would say. I mean, we’ve had cases where we’ve gotten lucky like this year, we were able to grow our site organically to about, you know, 250,000 visits a month. So we’ve just been, we’ve been lucky in that sense where we’ve been, you know, where our content team has been constantly learning and improving. So, we actually have been able to find some turnkey solutions of how we can actually scale that sort of side of the business. But most likely you know, its own longtail questions, you know how to repurpose it watch what is the best fashionable watches for men? Like all those kind of like long long-tail questions, but that’s something we just not on the go but in terms of specialization as its specialization is mostly on the ads Facebook ads, Google ads, Amazon etc.
Michael Bereslavsky 15:28 And they look at whether the business has a good following like if they have a lot of followers on social media if they have a big list of things?
Ronnie Teja 15:36 Yeah hundred percent we always look at like how sticky is the product right so are people regularly posting but on Facebook are people posting on Instagram are people actually like are they you know, they’re all over twitter? Hey, yo, hey, look at look at this new watch. It’s like the best thing ever. Like, and people are like mentioning it. There’s how many mentions the brand has. Is there a community behind it? Right. So for example, you could have a small Facebook community of about 5000 people and if these 5000 people are your biggest..they beat your drum and they beat the you know the drink the kool aid of your brand and they telling everybody about it, I would rather have this 5000 people than your page having 15,000 people and nobody gives a shit or you know your company.
Michael Bereslavsky 16:16 And how would you look at suppliers like are these products all branded with their own brands? Or would they be reseller sometimes?
Ronnie Teja 16:25 They are all branded products. We don’t we don’t dropship we don’t believe in that. Some I’m sure it works for some people, right? But no for us, we are trying to make a brand and I keep saying that again and again and say we and my team knows this. We have the DTC brand. We will sell in the next five years. We do not believe in private labeling. We do not believe in drop shipping. We do not believe in any of that stuff. I believe though, if I were private labeling, if I would drop shipping, I think Amazon’s a place to be hundred percent. Yeah, and our focus is eCommerce. Yeah, our focus is eCommerce, primarily. So I’d say 80% of our revenue is eCommerce focused. 20% would be like marketplaces. So if I look at marketplace, it could be like Mercado Libre, it could be eBay could be Amazon. We’re not strictly marketplaces, of course, Amazon plays an integral part integral role in it. And we believe that there’s a really good future in using Amazon because every consumers mind, the first place they want to go to is Amazon. But our strategy is to how can you leverage Amazon to bring that data back to our companies?
Michael Bereslavsky 17:35 Yes, great. So it sounds like you have a really great model going. You buy these businesses, you put them into your network, and then you’re able to, to improve things to improve the management quickly and improve marketing quickly with paid ads. And keep growing and probably maybe cross promote them a little bit, right.
Ronnie Teja 17:54 Yeah, maybe show audiences right. In some cases, for example, sunglasses and watches. They’re quite similar. They’re men like men fashion for example, we’ll be able to share audiences between the two upsells between the two pre order between the two sometimes we will test the product so we’ll be like oh, we have this idea to to get this new watch like the aviator watch to match the aviator sunglasses, you know, like a pilot watch or something you know, or a type of watch with a you know with a with a green sample or something so be able to cross sell to both audiences or even email lists so it actually works out.
Michael Bereslavsky 18:25 And do you sometimes buy product that’s popular and than the popularity just goes down and there’s not much you can do because it’s just these market trends that happen?
Ronnie Teja 18:34 That happens all the time man. Happens to me every month, but it’s okay. That’s why that’s Yeah, that’s why you have a sale right? You literally like say, Oh, hey, there’s a sale going on. Everything must go. All stocks must go and he basically said for half the cost fine. We still make 20% 30% of half price.
Michael Bereslavsky 18:41 That’s that’s a good business model. And so when you do these deals, do you try to get a good deal like to try to fail below market? Or are you more interested in just making sure that this is a good fit for your structure system?
Ronnie Teja 19:07 We are more discerning the fit right? The problem is if you start getting like all these last-minute things that customers…the problem is what a lot of people don’t understand is your customers are not idiots, right? The customers, the customers your wife, right? So don’t, don’t try and fool don’t try and fool your wife and fool your customer. So I’ll give you a good example, about six years ago, right? I thought it’d be a great idea that if I were to raise my prices by 50%, and then I give my customers a discount of 25% on Black Friday, my customers bless their souls, email me the same day to tell me that I fucked up. So let me tell you, they know man, so I don’t want to…I mean, that was my experience. I don’t want to like get on with that. I don’t want to like mess about with that. I think it’s just treat your customers as you know, as you are treated.
Michael Bereslavsky 20:02 that’s a good thing to live by.
Ronnie Teja 20:06 Yeah, I mean, I’m telling you, I thought I was being very smart. No, that will backfire. backfire immediately. You know, I had like probably about 20 bad reviews in a day.
Michael Bereslavsky 20:19 Yeah. How do you guys manage all the logistics like 15 different businesses, there’s probably dozens of suppliers.
Ronnie Teja 20:28 We have Yeah, we have a great third party warehouse in Kentucky and in San Mateo. We work with a couple of companies ship up ship crew, they’re pretty good. I have nothing but good things to say about them. And then you know, everything is just sent you know, as soon as it’s manufactured, etc, and the fulfill for us global. I mean, ideally, we should have a warehouse in Europe, but we don’t have you know, VAT licensing and all that and we have we have some issues with it, but you know, hopefully it should be cleared out by the end of the year. But other than that, And there’s there’s literally zero issues our main market like I said is the US I mean we want to win the US we want to put as much money we have behind into the US and if we I know that if even the US will be able to win the war.
Michael Bereslavsky 21:11 Yeah. And how do you handle manufacturing do just keep the same manufacturing contracts when you when you acquire a business?
Ronnie Teja 21:20 No no we have we have over…so we usually really go with the ecommerce companies preferred vendors, right? And I go visit the factories personally. If you feel that we’ve been you know, in some cases stick around with a dominant prices, etc, etc, etc. The idea is we you know, we have a preferred factories, we get enchanted with a Charmin Viet changxing wherever, and we usually are able to just approach them and you know, have a chit chat with them. That’s only if we don’t get along, and it’s only happened once to be honest, in most cases, it’s a pretty upfront conversation. Hey, this is what’s happening. This is what we want this is I know, I know, roughly how much, you know, we should be paying for the prices. And at the end of the day, we, you know, the distributor. I mean, we’ve, I’ve had only one experience, which was actually during this COVID time where we had a vendor we worked with for the last four years, and they decided to charge us 30% extra. And I literally told them, I said, you know, to eff off because I was like, I’m not gonna, I’m not gonna, I literally said, Please don’t talk to me again, I’m not gonna do business with you. And all of a sudden, they came back with the 10% low price. So guess what they call it? I don’t know, man. It’s kind of weird way because people are like, oh, we’re very hurt by COVID so we have to increase the price. And I’m like, I’m also hurt by COVID. I think you should be giving me a discount instead. Because every vendor we actually have like, so when COVID started, we went to every vendor we had we had a china vender to the US, saas, everything we were able to acquire between a 10% to a 50% discount on a long term deal with all factories all of our saas companies all of our suppliers. We even made Amazon give us a 30 discount on AWS web services. Yeah. So. So yeah, it’s, everything is negotiable. Right? And the thing is, if you come to me and say, Oh, I’m so sorry, we have to increase your price. Get out of here, man. That’s not how things work.
Michael Bereslavsky 23:22 So have you had a lot of effect from COVID-19? Now is this sale?
Ronnie Teja 23:27 Everything’s up 30. We have the physical the luxury stuff has gone down right washes and stuff and of course, put on sunglasses will go down because it’s summer, but we’re hoping that it would pick up in the next few weeks. Digital Goods, you know, 50% increase in revenue. Some of the other stuff that we enter Yeah. You know, wall decorations, your top like another 60% people have nothing better to do than decorate their houses. So yeah, so it’s kind of like a weird thing, right? It’s like if anything to do with house if you’re doing home improvement, you know, working on your car in your garage and stuff putting out like, like a nice little, you know, roof over your Jeep Wrangler for the summer and all that, you know, you need something to do. So that kind of stuff is great, but stuff like luxury items not so great, to be honest.
Michael Bereslavsky 24:18 Yeah, yeah, it’s interesting that you have the right portfolio. So even that’s something like COVID-19 happens, you know that you’ll have some that go up and sell that go down. See, so you have some diversification?
Ronnie Teja 24:31 To be honest, right? Yeah. We want to a way for everything to just be even, so though I mean overall I’m going to be coming out of covid like a maybe like plus 10%. growth year over year. Yeah. So it’s okay. I mean, I think that percent I mean, it could be minus 30%.
Michael Bereslavsky 24:49 And so how many products do you have across these 15 businesses?
Ronnie Teja 24:54 Ah, man, we have about 5000 plus views. Well Yeah, so Dude, I mean, like I don’t manage them anymore.
Michael Bereslavsky 25:04 Like there’s some businesses have just one product and like one product and like many businesses have like hundreds?
Ronnie Teja 25:11 Yeah, like say for example our watch brand probably has well, that’s one of the lowest ones it has about maybe 75 skews of watches, maybe another include the straps, maybe like 120. So 120 skews total, right? The sunglasses would probably be about 120 240 skews, right? Some of the software will be five or 4000 views, right. So it’s, it depends. It’s all dependent like, you know, pet food would be like 600. Right. Oh, it all out. Yeah. And all this changes. It just depends from place to place and person to person.
Michael Bereslavsky 25:48 Yeah, so it’s interesting. One thing I want to discuss with you is that, we’ve done a lot of deals with content sites, we’ve done saas deals. We’ve done some deals with ecommerce, but very few so and you got a lot more experienced in that, of course in managing and buying those. So what would you say are some big differences? What would you say are some things that might be unexpected for people coming into the ecommerce field from from a different one?
Ronnie Teja 26:16 Ah, well, in today’s day and age, you know, ecommerce, you know, we are all slaves to the victory. So Google, Facebook and Amazon. So, you have to find a way to like leverage and diversify your portfolio. So like for us, you know, the lessons I learned early on was the fact that, you know, I still act like that protect some of our businesses, and it’s really a little bit scary as we are very leveraged on to like Amazon, we leverage very leverage on Google paid ads, or we little leverage on Facebook. But the thing is, if you were to actually have like all three, Google Facebook, Amazon like 30 30 30 in the business, then even though one of the things goes down, of course, it takes a while to get it back, then what we can do is we can find another way to have the sales still coming in, you know, early on in my career, we had a business that was 100% focused on google and google suspended accounts. And then, you know, for three months, there was no income coming in. I was just spending money. So I had 150 thousand dollar loss one year. Because you know, I wanted to be the captain going down to the ship. So you know, please don’t be the captain going down with the ship. As soon as you feel like things are going down, fire all the employees, cut the fat as quickly as possible. And that’s, that’s what happened to us in covid too. So we cut on the fat we cut off salaries, we cut everything else. Yeah, so that’s, that’s the major thing, right. Second thing is if you know, if you decide to start an ecommerce business, you want to have a distributed team. Make sure make sure you take the time to hire. And we’ve personally speaking, I’ve made about half a million dollars to a million in mistakes in hiring people all the wrong people. Because I tend to look for the employees too closely. And I thought I trusted everybody to do the job. That’s not always the case. Right. That’s a that’s a big thing. Yeah, so And that’s what I would say. So it’s like, oh, yeah, you know, employees, don’t put all your eggs in one basket. Make sure like if you’re buying or if you’re buying, that’s the most important part, right? Make sure you do your due diligence, like I was talking to you about this guy. Who can you know, even I’m sure you offer these services to where you can actually like, before you buy a business, you can actually have somebody evaluate the business’s business worth affect your portfolio is business worth buying. You know, what is the what is the, you know, have a look at the CPA, see what the books are like, or some people find the books a lot. I mean, there’s a classic case of this guy in New York back in the 90s, who used to process all his credit card transactions on his own store. So it seemed like he was making 10s of thousands of dollars. But it actually was not because it was actually charged his own stores. He was actually running his credit card that way. And he was listed on the New York Stock Exchange, and he was making something like you know, you know, $10 billion or $20 billion a year to market for that. So yeah, be very careful of those things.
Michael Bereslavsky 28:57 Yeah, good. Good tip. So diversification Make sure to check the books and hire good people. Do you have some good tips on hiring? Do you have a method? How do you find good employees?
Ronnie Teja 29:09 You know what, I don’t hire anymore man. So I actually hired a guy, a proper HR guy to actually go through it. So a person who actually is quite he’s very good at his job. And he actually knows how to interview people. Um, and he’s in the DC His name is Julian. Julian Novak. And yeah, since I hired him, he’s a good EOS integrator. he’s a he’s a really good hiring guy. So you know, for me, I don’t worry about those kind of things anymore. I think you might have a course coming out soon. Or, you know, you guys can talk to him. But yeah, he’s, he’s good at what he does.
Michael Bereslavsky 29:45 And so you mentioned you guys have 35, 30, 45 employees right now. And how is it managed? Are they like all parts of one company or do they work for one company?
Ronnie Teja 29:57 Yeah, yeah. Yeah. Okay. Yeah. All parts. On one company, everything, everything that has to happen has to. So for me, I just have an executive team, I have about three people I manage, right? And it’s up to the executive team. You know, one one guys, you know, the CTO, the content marketing, and the marketing people. And the customer service people, head of customer service. So these are three people I work with, and the head of HR, sorry for people, but everything else is managed by them. I actually don’t touch anything else. But I still have to manage the teams. Yeah, of course. And then every week, we have a meeting, we go through, you know, how the company is doing financially, how the company is doing within each discipline, and we have a chat about it. It’s an hour and a half every week, but what it does it actually it’s a way of forcing you to do goals.
Michael Bereslavsky 30:45 So that’s the US part. And did you do you choose US yourself? Or do you look at different systems? How was how was it implement?
Ronnie Teja 30:55 Well, my system definitely did not work, which is basically like, oh, how are you doing? Oh, are you doing this? Are you feeling good? Okay, okay, that’s fine. That’s it. So please don’t listen to me. Please listen to the system. I think there’s a system that this system works for a reason.
Michael Bereslavsky 31:12 Well, did you implement like, how did you set up US? Did you have someone set it up for you?
Ronnie Teja 31:18 Yeah, it was this guy that got…the guy the HR guy was talking about you guys. He came in, he did all the systems. He actually implemented everything for me. Continued the hiring, it that uses it’s like something like yours. It’s not exactly yours. Yeah. But it actually works for us.
Michael Bereslavsky 31:34 Makes sense.
Ronnie Teja 31:36 Like saying, you know, it’s like a glove, right? every hand is different. And every glove is different, right? So it has to fit. It’s like a shoe right? Every shoe has to fit a different size. So for us, this was the best shoe that fit us.
Michael Bereslavsky 31:50 Yeah, that’s good. Yeah, we are looking to some something similar right now as well. It’s interesting to see this there are many all these different frameworks for managing business like OPR and…
Ronnie Teja 32:00 Yeah, but yeah, I would definitely say like you don’t need to look into a particular framework I mean my my two cents to you would definitely be that look that that shoe analogy right? The please please, please don’t actually go out or anybody who listens please don’t go out, and just like say okay this is the best fit for me and I havs to use this you have to value the organization. I mean, like how many people do you have?
Michael Bereslavsky 32:21 Yeah, we have about 20 Yeah,
Ronnie Teja 32:24 yeah, so for 20 people yeah, maybe you need it right.
Michael Bereslavsky 32:27 Yeah, that’s absolutely true. Like it’s just kind of like a shoe because there are there are many different companies and what we do mighty be pretty different from what like other companies do, so it’s definitely important to see that it fits well with the model. Are you team remote? are most of you guys remote?
Ronnie Teja 32:49 Disputed man, hundred percent like yours.
Michael Bereslavsky 32:52 And yeah, were are all of yours based?
Ronnie Teja 32:56 All over, Brazil, South Africa, Kenya, Tanzania. Vancouver, UK, Eastern Europe.
Michael Bereslavsky 33:05 That’s a widespread Yeah. We don’t have anyone in Africa yet we do have many in Europe, in the Philippines in, in Asia, some in US and Canada. Yeah. But how do you find people in Africa? Have you been there?
Ronnie Teja 33:28 very, very educated very well like I mean, the guy one guy who sits on a leadership team the content guy. I mean, he’s got a crazy story because he approached me using like an alias and I’m sure this has happened before like people, you know, some girls name, Emma or something. And he’s like, can give me a writing thing. And I said, Look, come come online, have a chat with me. And I said, I’m pretty sure your name is not Emma, so get the hell out of here. So anyway, we got a chit chat. And it basically turns out this guy, he’s living in like a secondary city like a Mombasa or something Kenya. And all he…he’s a driven guy, super educated, very, very driven, he wants to change his life. He wants to change. He wants to get out of the cycle that he’s in. And he says, look, all I need is, is a chance to prove myself and I said, Look, no problem, if you come work for us, we’ll give you all the chances you need. And then, you know, today he’s, you know, he’s worked over the last few years to become the reporter. And I want to talk about, you know, growing organic traffic to 150 thousand people or 250,000 visits. In a year. It’s probably because of this guy. Because he said, I said, Look, here’s your playbook. If you do everything right, you’ll actually be able to generate traffic and guess what, lo and behold, guys doing it right. You know, joined us I think November today is today’s what, June the nineth, and we’re sitting at so from zero on November to 238,000. On July, that’s not bad.
Michael Bereslavsky 34:59 Nice. What is what is a good profit margin when you look at an ecommerce product?
Ronnie Teja 35:08 25 to 40%
Michael Bereslavsky 35:10 right? So if it’s below that, then it’s probably not not good enough?
Ronnie Teja 35:14 Then you need to be selling higher volumes. If you’re selling something like a surfboard, that’s like $1000 bucks, and then you make a few hundred bucks, right? But if you’re sending a watch, I mean, watches have insane margens right? But if you’re selling something like, you know, what’s the low margin product, but sells in high volumes, phone case covers.
Michael Bereslavsky 35:33 Yeah.
Ronnie Teja 35:35 laptops, mouth mouse keyboard, but you’re not gonna make more than you’re not going to make 10 to 15 cables.
Michael Bereslavsky 35:44 Okay, electronics. Yeah. So yes, would be like 10 and that’s the margin you mean the margin after all the expenses, right? Like all the, like everything, including marketing shipping costs, team, sales.
Ronnie Teja 35:56 Yeah, your net. Your net should be at least Yeah, you net should be at least like 10 like electronics, you make 10%. Okay, but the thing is such a high volume product, right, like I like I see ordering and ordering, I would imagine that the margin is about a 200% 300%.
Michael Bereslavsky 36:15 yeah. It’s really good, but we’ll see. Do Yeah, yeah. Cool. Do you have their latest one? Verson two?
Ronnie Teja 36:27 I don’t know, man. I don’t know what I have.
Michael Bereslavsky 36:29 The first one they had was really big. And then the smaller one, which is…
Ronnie Teja 36:35 I have the smaller one for sure. Oh, yeah. Oh, yeah.
Michael Bereslavsky 36:38 It’s a huge difference. Like the big ones are so bulky. Yeah, they must have really good margin because there is a big product recognition. Like they’re basically a leader in that space.
Ronnie Teja 36:48 Yeah, there you go. It’s like but yeah, but like 300% or 400% margin, right. It’s only 220 US dollars or something like that. You know, it’s a it’s a crazy amount to spend.
Michael Bereslavsky 36:57 So you think their profit margin is more than 50%.
Ronnie Teja 37:01 300%, it could be Yeah, I would say 300%. Man,
Michael Bereslavsky 37:06 How do you calculate? How is it 200? Now, I mean, like, in terms of, like the profits, they get on out of out of sales.
Ronnie Teja 37:17 Whether, okay, so for me, it’s usually a cause, you know, your, your how much you’re spending to acquire a customer versus your cogs minus your cogs basically at the end of the day.
Michael Bereslavsky 37:28 Okay, okay. Yeah, yeah. Make sense. They probably don’t do much marketing now.
Ronnie Teja 37:34 It’s all organic, right? Like, how often do you see all the advertising? I don’t see them advertising anywhere. They aren’t advertising on Facebook. It’s such a, it’s a very small niche market is people who want to improve their sleep as people who want to basically you know, get get healthier looking at, you know, these auto statistics or whatever, even if they have 1000 people and you sell it to them like for $220 a day that’s 20 grand that you’re making, like every month.
Michael Bereslavsky 37:57 And so what what kind of rates do you look for returns from paid campaigns. Like if you are spending $100 on Facebook on AdWords or AdWords like what it….
Ronnie Teja 38:09 Depends on what product you have, right? If I were to use Amazon strategy, right, if I were to say, I am going to sell coffee, right, I know I have really really good coffee. But I am ready to acquire my first customer at the cost price of my coffee so I can actually say so my product is $10 I have no issues acquiring the first customer for $10 because I know once this customers in the funnel, I’m going to make them upsell them on email and other ways to subscribe for the long term. That’s one way of doing it right. Yeah, that I have no issue doing business like that.
Michael Bereslavsky 38:48 the you know the lifetime value do you base it on that?
Ronnie Teja 38:51 Yes. It’s a customer to me. Yeah. So for example for for sunglasses or like even like prescription glasses. Yeah, the first pair, we give away free. So the first time, yes, so the first time the customer comes, we actually make a loss on it. But what we get for the customer is we get their direct mail address, we get the email address, we get all the details about this customer. So when we did a calculation, we found out that if you were to get all these, you know, direct mail address, email address, all this stuff about a customer is gonna cost us about 12 to $15 on facebook, facebook just require that. Between $15 to $25 dollars US.
Michael Bereslavsky 39:39 Ok so it’s like $20 to get the customer.
Ronnie Teja 39:42 Pretty much right? Yeah.
Michael Bereslavsky 39:45 But that’s a customer who already made one sale like one purchase?
Ronnie Teja 39:49 No. It was basically like how do we how do we Okay, so so if you come to the website, and we said look, give us all your details and we will send you glasses for free.
Michael Bereslavsky 39:59 That’s expensive? You also send them free glasses and you paid $20.
Ronnie Teja 40:06 But man we have, but we have all their data. Yeah, that data is worth to me in the long run right is worth at least 150 $200 a lifetime value of the customer. Because the person purchasing prescription glasses isn’t just gonna buy that once the ultimate purchase prescription contacts, they’re gonna buy the glasses the next time they’re gonna buy reading glasses, they’re gonna buy everything else along with it. I can upsell them sunglasses, I can upsell them about 20 different things. I can upsell them on blah, I can upsell them on watches, I can upsell them on. You know, regular items. So you have to look at it from that perspective, right.
Michael Bereslavsky 40:43 Ecommerce is mostly a numbers game, isn’t it? You just look at the numbers and…
Ronnie Teja 40:47 How do you think Amazon got so big? I mean, Amazon’s basic strategy was, and it still is, we are going to give our customers the lowest price possible on product and then of course, they will use that strategy for Amazon basics. say, Oh, don’t worry about it. We are always looking to the lowest product quality, like for the lowest price. Yeah, I don’t agree with that model. But that has been their mantra since the last 20, 30 years. And they have been successful at it. And that’s what they’re successful. Like, if you were to look for anything else, they’re like, we will deliver the lowest price and the fastest way possible, right? With the most Americans to our customers. Right? And they have not actually ever moved away from that.
Michael Bereslavsky 41:29 Right. But that’s, that’s, that’s not something that’s applicable to most people running a small business, small commerce business. That’s not…
Ronnie Teja 41:37 What if it’s it, but but then what are your values, right? Our value is in our business to deliver an Amazon or Zappos experience. So we’re 24 seven customer support, which means we open a new year’s day we open at Christmas, we open on Hanukkah, we open on all that all that stuff. We will respond to our customers ticket with 10 minutes, right? If a customer ever called us if they want to order a pizza, we will send them a pizza free of cost on my company credit card.
Michael Bereslavsky 42:07 Well, have people done it?
Ronnie Teja 42:09 Of course!
Michael Bereslavsky 42:10 Like, have you had people asking for a pizza than they bought glasses?
Ronnie Teja 42:13 Just people pull it yank a chain man, college frat guys getting drunk to be like, yo, can you order some pizza? We called pizza for them. Yeah, it happened. It was funny. Yeah. And things like this happen.
Michael Bereslavsky 42:25 They also try to give them the best price, or just best experience?
Ronnie Teja 42:29 We told them. We were not going to compete with Amazon and price people out there from day one. Yeah, I mean, if people come and say, Look, we I mean, I would say we’re happy to give them a two year warranty instead. Right? We’re happy to give them because I believe in the product. We all believe in our product. Everyone gets to use the products that you know and wear them and use them like our customers do. So they actually know what the issues with the products are. Right. In terms of matching Amazon’s price, we’ve stated from day one, if you want to go buy from Amazon, you can go to a cheap Chinese manufacturer, you’re happy, you’re happy to get that same stuff on AliExpress. We’re not going to condone it. If you want to save a few bucks, sure go ahead, but let me know. But let me know when it’s broken. We’re happy to service you then.
Michael Bereslavsky 43:16 So then it sounds sounds like your strategy is to have good quality products, provide amazing support, and just know your numbers and do proper campaigns and be good at paid traffic.
Ronnie Teja 43:32 Yeah.
Michael Bereslavsky 43:33 Nice. Yeah. That’s pretty good. And then what? What are your next steps? What’s your goal now? Trying to get to nine figures?
Ronnie Teja 43:42 Would be nice to get to nine figures, man, that’d be great. You know what I mean?
Michael Bereslavsky 43:48 Maybe next year?
Ronnie Teja 43:50 Next year, not this year. I think I’ll take a long time to grow but to be honest, I mean, I would love it for to happen next month or tomorrow. But you know, you have to manage expectations that a certain way time.
Michael Bereslavsky 44:01 What was your best deal? What was the best business you acquired? And how is it doing now?
Ronnie Teja 44:06 I think it’s the sunglasses one that we you know, we purchased for 250 grand we grew to 2.5 million in the first six months.
Michael Bereslavsky 44:13 Right now and how long has it been? Six months?
Ronnie Teja 44:19 Yeah, no, no, this was about a year and a half ago.
Michael Bereslavsky 44:22 Has it already paid off. Do you get more than…
Ronnie Teja 44:25 Yeah, it’s paid off paid itself twice or thrice? Oh, yeah.
Michael Bereslavsky 44:30 So like, like two years and you got three times more money than what you paid for it or? There’s a great deal.
Ronnie Teja 44:38 Yeah. Got lucky.
Michael Bereslavsky 44:40 Cool. And I know you’re also an avid traveler. Is that right?
Ronnie Teja 44:45 Yes. Somedays, not these days.
Michael Bereslavsky 44:49 Yeah, not not these days. But tell us about a little bit like what how many countries have you been to? What’s your favorite?
Ronnie Teja 44:54 Oh, I don’t know, man. It’s I think I lost count after 50. But I would say my favorite one? I think a favorite one I went to last year would be Kazakhstan and Uzbekistan, in the Pisco basket was great, but went to another place. It’s escaping my mind right now. But yeah. But so it was Kazakhstan for sure. And the other one that I really feel passionate, and for some reason at home, but in South Africa, Cape Town and in a place called, you know, Botswana, and those places where, you know, there’s a lot of wildlife and it’s nice to go out and all that. Yeah. So being in the middle of the jungle and sleeping under the stars. It has its own budget, so I feel I feel at home there.
Michael Bereslavsky 45:44 Yeah, nice. Yeah, I was planning to visit South Africa next year.
Ronnie Teja 45:46 I think that’s phenomenal.
Michael Bereslavsky 45:48 Yeah, I’ve noticed kind of a same after after, like about 50. I’m probably at around like 50, 55 countries that I’ve visited total. But it’s sort of like at some point it becomes less interesting to count.
Ronnie Teja 46:00 I think after 50 just a party because everybody keeps, uh, I think everybody keeps like a like a notebook or something. But I’m like, it’s okay. You know, it’s like people like to go to I mean, I you know, we live in Thailand and Thailand. Yeah. Beautiful. It’s amazing. People are freaking nice man. But you know, you want you want a little bit of the, you know, you want a little bit of, you know, the outdoors, you know, being in the middle of with bloody lions and, you know, rhinos, and you’re like, wow, this is really cool, man. It’s my life. So it’s cool. Yeah.
Michael Bereslavsky 46:29 yeah. After you’ve you’ve traveled quite a bit. It’s difficult to to get that culture shock again. So yes, so it kind of becomes less interesting to travel to similar places. How have you found that as well? Like you you want to find something that’s a bit more…
Ronnie Teja 46:44 Don’t worry about it man. I go to India once a year and that’s when I get my culture shock back. And I’m Indian. Yeah, so if you want a culture shock, man, if you want to get refreshed to go to India, I swear to God, you’re getting a culture shop within five minutes of landing there. When they open that airplane door and it smells like poo.
Michael Bereslavsky 47:03 Yeah, I’ve only been the once so far. It was quite a major culture shock for a few days. Yeah. Nice. Well, thank you. That’s been very, very interesting. We’ve learned a lot about ecommerce. Yeah. Like any final advice for people who want to go and buy this ecommerce business
Ronnie Teja 47:24 I don’t have any advice for you guys. Like I said the same thing I’d say again and again, it’s like get somebody to evaluate the business before you buy it right. So get some practical to the financial statement spend thousand bucks spend 2000 bucks you know, talk to guys like you know yourself maybe and just see okay, maybe you know, because you have so many experienced by business you probably have like a checklist that you already know like what what are the trip wires and what are the minds after you know before you actually go ahead and go for it.
Michael Bereslavsky 47:51 Yeah, it’s for us. It’s due diligence is a bit of a mix of having a checklist but also having like, like a sense of what’s what’s expected. Kinda like like a gut feeling when you when we get someone who’s trying to scam us we like I will usually just know right away that something doesn’t feel right. Or that someone is trying to fake some numbers like you’re kind of just kind of know that something doesn’t…
Ronnie Teja 48:18 It’s your gut man. Afte you buy a few businesses here your gut’s gonna tell you that you know? Yeah.
Michael Bereslavsky 48:25 Well thank you, Ronnie. And how can people how can people reach out to you or find out more about you?
Ronnie Teja 48:31 Yeah, you can add me on LinkedIn. Ronnie Teja, you can actually reach out to me on my email, [email protected].
Michael Bereslavsky 48:38 Thank you, have a good day.
Ronnie Teja 48:41 Thanks, buddy.
Enjoying our podcast? Support us by leaving us a review on iTunes or on your favorite podcast app.