#414 - Amazon FBA Success to Chaos: How Brian & Janine Navigated a Nightmare Business Exit

#414 - Amazon FBA Success to Chaos: How Brian & Janine Navigated a Nightmare Business Exit Kevin King: This is episode 414 of the AM PM podcast. Today I've got a fascinating story for you about selling your Amazon business. Janine and Brian are the guests today. They're a couple that were former pharmacists. They started their own Amazon businesses independent of each other, then they joined together. And had a product that took off. It took off so well, they decided to sell it. They were in contracts with Thrasio to sell the business. And then all bloody hell broke loose. And it's an amazing story about actually what happened while they're in due diligence. So you're gonna hear that story today, learn some lessons from it, as well as what they're doing now. So enjoy this episode with Brian and Janine. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast, where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Speaker 2: Let's do this. Unknown Speaker: Here's your host, Kevin King. Kevin King: Look who's here right now. I've got two lovely people, Brian and Janine. How are you guys doing? Speaker 2: We're doing awesome. Speaker 3: Good. Kevin King: Good. Just good? I just heard you just came back from a really awesome experience. Speaker 2: Yeah, we do. We just spent three full days in Vegas with Perry Belcher with some other Driven members and Ignite members just kind of brainstorming business. Kevin King: That's awesome. What is that exactly? Is that where he brings people to his house and you sit around just brainstorming your business and come up with ideas or is it like structured type of thing? Speaker 2: It's a little bit structured. He calls it breaking point and it's basically going in and kind of breaking down your business and building it back up the way he would. But it's honestly just a lot of sitting around and brainstorming, everyone coming up with ideas, sharing stories. It's a lot of fun. Kevin King: Are people willing to share? I find sometimes people are a little nervous to share like what they're doing or what they're, especially in the Amazon space, what they're doing or what, or is it because it's such a small group, everybody just trusts and it's just very open, vulnerable type of thing. Speaker 2: Honestly, I think the biggest thing that we learned by getting outside the Amazon world in terms of masterminds and stuff is that people share, unless it's an Amazon business. Yeah, it's true. We've been in Blue Ribbon, we're in Driven now, and everybody's sharing what they're doing, what's working, what's not. Nobody seems to To be worried about copycats and stuff like that. And then every Amazon event mastermind, it's like, yeah, I'm in this category. That's about the best you get. Yeah. Speaker 3: I mean, even Perry had a guy there that's in the exact same space he is. And that's literally the guy admitted, that's why I'm here because we're in the exact same space. And, you know, there's no animosity whatsoever. They both just brainstorming. Perry's teaching the other guy what he's doing that's working and teaching literally his competitor what to do because that works. So, you know, it's, um, It's different than the Amazon world. It's nice. Kevin King: I agree with you. It's been interesting. I totally forgot about that. That's been the case since 2015 since I started selling FBAs. Nobody ever wants to tell what they do. They'll say, what category are you in? I'm in pets and that's about the extent that you usually get. But I just did my think tank last week here in September, last week. This think tank is where 12 people came out and they sit in a hot seat. It's exactly what you said, Janine, is they're like, I got a pain point. I got a problem. Let's say I'm in supplements. I'm trying to sell supplements. I'm trying to do X, Y, and Z. Well, who's best to actually tell you what to do is another supplement seller. Like you just said with Perry. But so many people were afraid to actually come to this event. The people that did got massive, massive, massive value. But so many people were like, no, I'm not going to sit down and reveal my brand and my stuff to these other Amazon people. And I totally, when I started to sell this event and put it together, I totally forgot about that because I've been at so many events, like you said, where both members are driven, which is a $30,000 a year mastermind, not Amazon based, but there's a few Amazon people in it and some other stuff. And it's not an issue. And I think that's a problem that a lot of Amazon sellers need to get out of their head. I think, you know, maybe in 2015, 2016, maybe there's some credibility to it because that was back in the days of just buying a product on Alibaba, stick your logo on it. And sell it. But today it's so much about branding and so much about a whole lot of other things that I think that's something that I don't quite understand why it still is pervasive. Speaker 2: Yeah, I don't know if it'll change but it does feel that it needs to. You know, because you go to events and you hear a story or you sit next to somebody and you're talking to them about their Amazon business. There's such differences between categories and products and everything that without really knowing the full story, it's hard to learn certain things. You can get concepts but we're all a little bit too tight-lipped on it. Kevin King: When did you guys start selling on Amazon? Did you start together or were you doing something independently and then you came together or did you start the whole journey as a couple? Speaker 2: No we started independently but we didn't, neither one of us had any great success until we were together. Kevin King: They always say a partner makes you better, right? Speaker 2: No, for sure. Speaker 3: He's good with numbers, analytics. He's like the numbers guy. I do the fun stuff. That's what I always tell people. I do the marketing, the email and the ads, all the fun stuff. But those two components are so important and you can't have one without the other. So, I mean, thank God I found him because, you know, my numbers was all a mess. I was doing things that doesn't even make sense on number, but it was marketing, it was advertising, it was fun. So I just did it without even thinking about the numbers. Does this number really work? You know, and that's what he's good for. Kevin King: So is your background in finance or in science or something, Brian? Speaker 2: We're both pharmacists by trade. Kevin King: Okay. Speaker 2: Yeah. And when I keep thinking, like when we tell the story, we're like, when did you start? I thought it was amazing selling machine. And I was thinking about this before coming on the podcast and I think my first book was Arbitrage by Chris Green and it was just about buying things at Clarence and putting them up there. So Retail Arbitrage and then another one Silent Selling Machine by Jim Cochran. I was pharmacist. Also, I owned a tanning salon and some juice bars and I was buying like closeout tanning lotion and having the girls that worked for me just bundle them together, sending them to Amazon and I was selling them that way. Never a big success, but it was so intriguing that you could literally send Amazon a box of stuff and you'd start getting sales. And I was like, wow, and this was probably 20, 13 to 2015, somewhere around there. And then we met 2016, 2016. You were ASM3. Yeah, that sounds right. Kevin King: Did y'all made in the pharmacy business? Like, did y'all work at the same pharmacy? Okay. Speaker 2: Yeah, it was, I think we're both entrepreneurial, both doing little things on the side. We had a job, I had businesses and one day I just was sharing like, hey, check out this Amazon FBA thing because she was selling, she was doing some YouTube stuff. I mean, you can probably tell better, but some stuff on eBay and she was like, what do you mean? Like they're shipping it for you? And it was kind of just, that kind of just started the whole. Speaker 3: I had never heard of Amazon FBA before I met Brian. This was like 2016. I saw stuff on eBay, especially when I was selling all kinds of books, DVDs, clothing, all kinds of stuff. When I was selling shoes, which I did for almost two years on eBay, I was going to the post office every day. I was boxing them up in my house. It was a lot of work. When he told me, no, you just send it to Amazon and they ship it for you, I'm like, what? What do you mean? Like they ship it for you? Because I knew how much time that took me, the packaging, the labeling, going to the name office. You know, I know how much time that took. So when he told me Amazon does all that for you, that was super intriguing for me. So within two weeks, I had already, you know, launched a new product on Amazon. Maybe three weeks. I don't know. I took action and I was fast. Kevin King: So how are you sourcing, Janine? Were you going to garage sales and buying CDs and reselling them or buying shoes? Speaker 3: I was buying wholesale lots from other eBay power sellers and reselling them as individuals. I found a website that would sell me shoes, like a box of 20 pairs at a time for various styles. So I would look up to see like what celebrities are wearing, what style is popular and just kind of like do that. And I was chasing trends and I wasn't always right. Shipping really killed. I'm in Massachusetts and a lot of California people buy them. Every time I got a California sale, shipping just really killed all the profit. But you know, I was making a little money, nothing that would replace what I make as a pharmacist. So I was just kind of doing things, but nothing was really working until I met Brian. He told me about FBA. I did ASM, went through the course and. Kevin King: Pharmacists make pretty good money though. So were you all just, you just had an entrepreneurial, both of you had just had a little entrepreneurial bug on the side or you were just like kind of burned out. This pharmacy thing's kind of cool, but it's just, I don't see myself doing this for the next 30 years or was it you just wanted to just have a little side hustle and you just love the challenge or what drove you to that? Because pharmacy, you know, pharmacists can make nice six figures a lot of times. Speaker 2: Yeah, so I know for me, so I graduated as a pharmacist I was always entrepreneurial, so whether it was multi-level marketing or I did so much stuff when I was young. But from the day I graduated and got a job as a pharmacist, every shift in my head was, what am I going to do next to get out of pharmacy? It was that quick that I wanted to leave. And I bought a local tanning salon, I think after being a pharmacist for like maybe a year. Never tanned. It wasn't something that I liked. I was just literally looking for a business to buy. It was seller financing. I bought it, built that up to where I was able to leave pharmacy, started opening other salons, juice bars, small gym. Then I kind of went seven, eight years in that. Kind of had a downturn, went back to working pharmacy, did that for another five, six years, and then completely have been out since 2018. And I don't plan on going back. Kevin King: It's a good thing those things didn't work out. You wouldn't have met Janine. Speaker 2: Right. No, for real. Speaker 3: Things happen for a reason. Speaker 2: And it did. Like she's, she can tell you, but she's, you know, you sell courses and you sell information and stuff like that. You know, there's a, She's the 2% that takes action on things and she literally takes action on things and doesn't understand people that buy courses and don't. Speaker 3: It doesn't make sense to me. Speaker 2: All I had to do was kind of just show her a little success and it wasn't like I was making money but I was making sales and that was it for her to believe and just jump. More than, you know, she just jumped into it. Like, she quit the job before she was successful. So she left pharmacy before I did. Speaker 3: But this is not advice for anyone who's listening. Do not quit your six-figure job before making money. It's just what I did. Kevin King: So the two of you teamed up then, so you're both selling whatever you could find, shoes, CDs, random stuff, arbitraging, and then did you just come together and say, hey, we just took this ASM course, why don't we do a private label? Is that kind of how it evolved? And you came up with, you did some research and came up with a product line, right? Speaker 2: Sort of, but still independently. So I was selling ski masks and they were, you know, I think I had like 500 that I was kind of selling through. And then when she started getting interested, I don't know how many products you can, how much you launched. Speaker 3: I sold like a dock leash. Like the one where you put around your waist. I tried to sell bike headlights. Kevin King: I tried to sell- That was you that was competing. I sold a leash that you put around your waist too. Speaker 3: Yeah, you too? Kevin King: Yeah. Speaker 3: That's funny. What a small world. But I've done all that before. I went through the ASM course. Because I'm talking about doer and not thinking very much, I heard about the FBA. I'm like, okay, I'm going to go on Amazon and see what's selling and then just go sell that. I literally picked on the product with the most reviews that sold like a ton. And that's how I was doing my quote unquote product research. And of course, that's like complete idiocy, you know, after realizing But that's the power of learning and networking and taking a course and following it. So I did that and then I realized, wait, that was kind of stupid. I literally went after the hardest thing, like things that you're not supposed to do when you're starting out. I picked on a project that had like 25,000 reviews to compete against. But then going through ASM, I followed like what they told you to do. Almost to a T and then I came up with several different ideas. I picked out one, I did like a worst case scenario, best case scenario, pros and cons and I just went with it and it worked out. Kevin King: So this is 2018, right? Speaker 2: So this would have been 2017. So after both of us having a bunch of successes only in that the stuff was selling but never profitably. So we both had products that were just kind of moving and we're spending way too much on ads and they just weren't good products. She hit one, so it was a multi-unit charging station for cell phones and. It was an electronic category. It seemed competitive. I told her it wasn't a great product, so that shows you how much I know. But it got traction really, really fast compared to the other ones where it was like you had to really work to get these things sold. This thing went off really quickly. I think she started with a thousand units and she was, I think we're talking to you about this at Driven, she was trying to devise a plan on how to buy the next thousand. And I'm gonna borrow from here and I'm gonna do this and she's putting a schedule together of okay, I'll get a thousand and then after we sell those and. And we're literally sitting eating ice cream one day and I said, everything good comes from ice cream. I said, you can't buy it. I said, you need $100,000 right now. And you, cause this thing's going to scale. And she's like, what? You're crazy. And I'm like, no, like you can just tell certain things just go quick. And this was going to go. Um, that was actually one thing we learned this weekend with Perry. He said every success he's ever had with his businesses, there are immediate successes. And that's something like to really think about. Cause, I think a lot of us have businesses and we keep trying, we keep trying. We're going to hit a breakthrough. It's going to get there. But he said, you know, every single thing that I look back that really, really worked, worked immediately. Speaker 3: Within 90 days. Speaker 2: And that was this. And so she, she's borrowing from, from her sister and from cabbage loans and from credit cards and for everything. And then that was the brand that we were able to, to grow to almost 5 million in revenue. Speaker 3: And then we exit in 2020 to Thrasio. Kevin King: So you, it was yours and then you came on as a partner or you just came on to help her? Speaker 2: Yeah, she keeps saying I stole half her business. So we were like together as a couple then and we were just both working on it and it kind of just, we grew that thing. Speaker 3: He's always way in my proving how much he was worth. Speaker 2: Yeah. Speaker 3: That ice cream story, literally without him telling me, you need $100,000, I'm not sure I would have made it the same way. On Amazon, sales velocity means everything. My plan was literally, oh, I'll buy 1,000 this week, the next 1,000 in three weeks, and I had this whole thing mapped out. That one little thing that he told me to do, I looked at him and he was crazy. 100 grand? I just quit my job. I'm barely making any money. I spent my last $10,000 on the first 1,000 inventory. Where am I going to get 100 grand? Kevin King: How did you raise it? I mean, he said you borrowed from your sister in Cabbage, but you just had to string it together and 10 grand here, 5 grand there, 20 grand here. Speaker 3: Credit cards. I was pulling from every source that I had. I was doing some sketchy things. This is not advice, by the way. I would use my PayPal account to pay my other PayPal account with a credit card, so I didn't have a cash advance fee. I was pulling and pushing. I borrowed 50 from my sister, 36 from Cabbage, and the rest was through credit cards and whatever I can pull. Kevin King: Did you have to go back for more after that hundred or you were able to cash flow it from that or did you have to take one more round of funding as it scaled up? Speaker 3: It was Amazon lending. The first loan was like $10,000. The second loan was like $70,000 and then the third loan was like $500,000. Kevin King: Wow. So this one product sold $5 million a year. So you're selling, so it sounds like your landing cost was somewhere around $10. So you sold 50,000, no, 500,000 of these. No, that's gross revenue. No, sorry. Speaker 2: That's gross revenue. Kevin King: Yeah. Speaker 2: So we're selling them between $40 and $50 retail. Kevin King: So you sold over a hundred thousand in a year. Speaker 2: Yeah. Kevin King: That's awesome. And when was it you came to the billion dollar seller summit at some point? Was that around the time when everything was just like rocking and rolling? Was that 2019, 2020? Yeah. Speaker 2: So that was... It would have been 2019, I believe. Speaker 3: Yeah, I think so. Speaker 2: I don't know if it was your first one, but it was one of your early ones. Speaker 3: Yeah, we were shooting and throwing axes in Texas. Kevin King: Oh yeah, that was the second one. That was the one in November of 2019 and that's where you met Thrasio. Speaker 2: Yep, that's where we met Ken from Thrasio and that was just pure luck. We had listed the business for sale with Quiet Light with Joe Valli. Kevin King: In 2019, you'd already listed like a year and a half after going. Speaker 2: I think it was started in 2017 and it's just kept growing from there. So, towards the... Kevin King: A couple of years, you listed it basically. Speaker 2: Yeah, because I know we got the LOI in December of 2019. So, we probably listed it a few months before there. And to be honest, to give networking credit and to give you credit, we were not getting people knocking down the door to buy this brand. It was in the category that was electronic. So, there was that... The technology risk and stuff like that. No one wanted to touch it. The aggregators didn't want electronic products. We got a few tire kickers, you know, interviews looking at people that weren't getting any offers and it wasn't on the market for that long. We came to your event at the beginning when you have everyone introduced themselves and I think you were kind of separating like, you know, here's the 1 to 10 million dollar sellers, the 10 to 20 or whatever and this guy stands up and it's a 75 million dollar seller and. We heard of Thrasio at the time, but I don't think it was as well known. And we thought he was just an individual seller. So when Ken stood up and he said he was from Boston and Thrasio. So I was like, wow. So I just literally caught him in the hallway and said, Hey, we have a brand for sale. We live 20 minutes away from you. Can we get together and talk about this? He's like, yeah, of course. You know? And so we just hooked up from there and They gave us an LOI a few weeks later. Speaker 3: Yeah, the power of networking and going to events, Kevin. Talk about that. Speaker 2: Yeah, I don't think they would have reached out to us. You know, they had already seen the deal. Joe had put it by him. It was literally just talking to the guy. Kevin King: Personal face-to-face relationship. Speaker 2: Oh, big time. Yep. Speaker 3: When he called us to go meet them at their headquarter, I thought, you know, he wanted to ask about numbers and this and that, but it was zero of that. Literally, he was just asking us about our lives and who we are. That was the only questions that he was asking. So I'm like, oh, so it really matters, you know, who's behind the brand. It's not just what's on paper. And I think that was what helped with the deal. So meeting him in person at your event is key. Kevin King: Why did you decide to sell? Was that because it was becoming the cool thing to do or was it like, you know what? Let's make some money while this is hot before I'm scared there's going to be a downturn. Let's get out while we can or you're like, oh, we want to go buy some real estate. Let's leverage this. What was the reason for selling? Speaker 2: So, what triggered it was, because we were not in the selling mindset at all. We were growing this thing, things were going great. It was a tough brand to run. It had suspensions all the time. Unknown Speaker: It had bad competitors. Speaker 2: Yeah. So, a lot of safety complaints because it's electronic. It would melt somebody's iPhone. It would, you know, all kinds of stuff. So, constant suspensions on the Haro SKU. So, it was very stressful, but we still were going to grow this thing. It's growing like crazy. We joined Blue Ribbon and we had a 30-minute phone call with Ezra and we were kind of asking him advice on how to scale this thing, how to put it on Shopify, yada, yada, yada, and about 15 minutes into the call he goes, I'd sell it. That wasn't what we're expecting from him. He goes, you're in a tough category. It's a search-based query product. So if they're not searching for it, it's going to be hard to advertise this thing like Facebook traditionally. And he said, it looks like things are rocking for you. I would sell the brand. And he said, I have a great broker. I'm friends with Joe Valli. Why don't you guys at least talk? And that's kind of what started it. I had businesses in the past that I should have sold that I never did and just kind of rode them to the bottom. So, I saw them peak and I saw them kind of go away and just kind of close them. So, I kind of learned over the years like you sell when things are good and it's hard to do. So, I think having those times in the past and then having someone Who are respected, you know, and as we told us, just sell like, huh? But then that's that was it. So we started getting the brand ready for sale. And I mean, thank God it was timing was really, really good. And it was it was luck. You know, it was it was sitting down with him and him kind of saying it and things just kind of working out. So. Kevin King: So, then you get an LLI at the end of 2019 going through due diligence, COVID hits and something else happened I think you told me had driven right around the time where just before there's supposed to be a wire transfer with a seven-figure, a nice seven-figure wire transfer, something happened. What happened? Speaker 2: We had a bunch of things happen, believe it or not. So, I was going through some past notes because I wanted to get some of the wording right on this. Because part of the story, we haven't really told many people, we told you part of it, but that was the last hurdle that we had to get over. So during due diligence, we had a safety complaint. This is exactly what the risk of this brand always was. So our listing got taken down and it was, I don't even think it was a week or two after LOI. And I called Joe Valli and I said, Joe, we have a problem. Like our listings down, hero skew, you know, we're losing five to $7,000 a day. And we had gotten suspensions lifted before, but every single time it was more and more paperwork and the delays were longer. And he's like, well, let's just be honest with Thrasio, call him up, tell him you're working through it. You're going to get it taken care of and let's not hide it. Let's bring it out right now. And we did. So we talked to Thrasio and they said, OK, just let us know how it goes. And they were pretty cool with it. So we got that settled. Kevin King: Was it a legitimate complaint or was it someone just saying my house burned down? Speaker 2: It was never clear. That was what was frustrating about the brand. Amazon, they take you down. Speaker 3: They don't always tell you why. Speaker 2: You don't know why. Speaker 3: They don't tell you what message from the customer triggered it. They just say they got a complaint. They don't tell us who, they don't give us the details, they don't give us anything. Speaker 2: No way to contact the customer, no way to know if they're lying or exaggerating. Take it down and then we had to show all the safety certifications and everything. Then we had an inventory mix-up where we had sent in directly from China 4,000 units of a different color and it got mixed up with our hero SKU. So this is still during due diligence. We recalled 4,000 units to a storage unit 10 minutes from our house in the middle of the winter when it's 10 to 15 degrees out. Freezing. Kevin King: And we went through- They're sending those back like one or two in a box at a time. Speaker 2: Yeah. Kevin King: It's not like there's several pallets of units. It's like you get 300 boxes. Speaker 2: Yes, and it was a little better than one or two in a box, but it wasn't much better than that. And we did it at a storage unit, so we're meeting them there every day and we went through 4,000 units by hand, sorted them, relabeled them and got them back in. So that was also during due diligence. Thrasio objected to the lawyer that we were using because she had worked on Helping them when they got started as a company build their APA templates and stuff like that. So we've been working with her for a few weeks and they said we don't want to work with her anymore. So we had to find a new lawyer. So we're going through all this stuff and we're like, oh my God. Unknown Speaker: We can't make this stuff up. Speaker 2: And then I think days before Final close so we had resolved all of this stuff because one thing I mean any most business people are but. Problem solving is like part of I think my strength like it if I have a problem I will figure it out and I don't like to lose I don't like to quit and I will. Solve a problem, but man were we getting like worn out because you get like this is not going to work It's not going to happen and to give the rest of it. Kevin King: You can taste that money. Speaker 2: It's You can smell that bread cooking in the oven It's too close at that point and and Thrasios credit. They were great to work with I mean they they just kept kind of rolling with us. They never adjusted any any of the Any of the offer or anything we got you know what we had agreed to and from the start But then days before- No, it was the morning of. The morning of? Speaker 3: We were supposed to sign at three o'clock. I woke up that morning, it was like six in the morning, okay? That day, we were supposed to sign at three o'clock, like literally the final signing. I woke up, it was six, 6.30 in the morning. I looked at my phone, like we always do, you wake up first and you just grab your phone. ASIN suspended, ASIN suspended, ASIN suspended, ASIN suspended, ASIN suspended. Kevin King: Shit. Speaker 3: IP complaint. This time, basically the whole brand was taken down. Almost no brand. Basically everything that made any money was taken down. Kevin King: You go straight to the bathroom and throw up? Speaker 3: I think I was in shock. Speaker 2: There were a lot of tears. Speaker 3: No, I think I was in shock and I'll let him tell the rest of the story because I was in such shock, I don't think I remember much. Speaker 2: So, it happens and we're like, same thing. I called Joe and this time I'm like, Joe, something's, this is bad, right? And we had our first and only to date, million-dollar month in December. So, we're going through due diligence. We had a million-dollar month in December. So, everything on the business side is going good and we just keep getting hammered with like these problems. And so when this one hit, we were, both of us were just scared like this is not going to work. Speaker 3: Oh, I thought it was over. I thought it was over. I threw my hands up, but you know, he kept going. Speaker 2: Yeah. So I called Thrasio again, told him what happened. We told him it was a BS complaint and we're going to fight it and we're going to get it figured out. Just be patient with us. And man, did we try, we tried all the normal stuff, you know, we had a call up at three o'clock signing. Yeah, so we just basically, you know, push that until further notice. And that happened multiple times during this deal. So now we're in the beginning of February. We got the LOI beginning of December so it's now going into the third month and so we tried the Amazon route, tried to invalidate the IP complaint, tried to do all the research that we could. We had a SAS Corp representative from Amazon at the time and we had her trying to help us and we're getting nowhere. Speaker 3: We had an IP lawyer write us a letter. Speaker 2: Well, we reached out to Kevin, I emailed you, we had met... Speaker 3: What's that guy's name? Rich Goldstein. Awesome guy, love him. Speaker 2: Also met him at your event. So we reached out to Rich and he's like, man, this is a tough one. So this guy that did the complaint, There was, I believe, four private label sellers on Amazon, all using the same factory in China. And we're all using the same design. Kevin King: It was... Speaker 3: There's nothing proprietary about it. Kevin King: Especially if they had a different name and logo on each one. Speaker 2: Right. And that's it. And we had been selling for around the same time as this other seller. I think he predated us by months, you know. Speaker 3: A couple of months. Speaker 2: And he filed a patent in China. Using the factory helped him do this and we thought this, we're screwed. Kevin King: He got a US-based seller or was he a Chinese-based seller? Speaker 2: He was a US-based seller, yeah. Okay. And so the riches letter didn't work, nothing's happening. Speaker 3: You know, the factory helped this guy get a patent. This is how the Chinese don't get it. You know, they don't understand that, oh, we sell to four sellers. And if we have one of them get a patent, they're going to screw the other three sellers. The manufacturers in China, I don't think they understand like patents the same way we do. They literally helped him get the design patent and he got it. And that's when he took all of us down. It was me and it was us and a few other sellers that the same factory was selling to. Kevin King: I can't believe it. Did he get the patent in conjunction with them or they just basically gave him the IP? Speaker 3: They gave him the information to get the patent because you need like certain documents or whatever. They gave him all of that to get the patent. Kevin King: And once you have a patent in China, you can block exports. Speaker 2: Yeah, and it was, she's right, it was a U.S. Kevin King: It was a U.S. patent. It was a U.S. Speaker 3: It was a U.S. Speaker 2: patent. Speaker 3: He got a U.S. design patent. Kevin King: Oh, okay, okay, okay. Speaker 2: Yep, so he did have a patent. Kevin King: Issued, not pending, it was issued. Speaker 2: It was issued. Speaker 3: It was issued. Speaker 2: Yep, and when we looked back at it, it had been issued like on Christmas Eve 2019, so he had just had it and he waited until It was almost like he knew this whole process was going through. Kevin King: Was he outselling you? Speaker 2: No, we were outselling him. So we were the leader in that space. And then we reached out to the other sellers because he took everyone down. And it wasn't a lot of us, but I think it was four total. And so we started talking with them and we all started doing our own research, getting our own lawyers. We're all, you know, going crazy. Speaker 3: We got the factory involved. The factory owner got involved. Speaker 2: Yep. And Amazon wasn't lifting it. So the total time was about two weeks. It felt like a lifetime. I finally got in touch with The other brand and it was emails at first and I looked back at my emails and at first we're offering to give them 25 grand, just get us back up. We'll pretty much try to negotiate anything for us to continue to be at a sell. We've all been selling the same thing for years. We're just a small business like you. We're a family, yada, yada, yada. He was looking for, he wanted a license agreement at the time. He wanted us to pay per unit and Thrasio was not having any part of that. So that wasn't even an option. So they wouldn't have purchased us if that had been the case. Kevin King: I'm surprised Thrasio didn't back out at this point. Speaker 2: Oh, I'm very surprised. Speaker 3: Oh my god, yes. Speaker 2: Very surprised. Speaker 3: Surprised me too. Speaker 2: So a lot of this was just email back and forth. And then one day I said, hey, can we get on the phone? Can we just talk about this? And he agreed. We got on the phone. And at this point, so Janine had been, don't tell me about anything anymore. Speaker 3: I couldn't sleep. Kevin King: I couldn't eat. Speaker 3: It was the longest 14 days of my life. I just couldn't. Speaker 2: She thought it was kind of done. Didn't even know what I was doing behind the scenes. I wasn't telling her because I was afraid it wasn't going to work and why Why pull her through the stress? I was stressed enough, but got on the phone with them, had a good conversation with them and he literally was a religious man and he said, so you truly believe that you have right to keep selling this you feel that i've harmed you it's not fair you know all this stuff and i said yeah you know i said, we didn't copy your design we bought from the same people nothing you know we're just business people we're just doing this and, And he said, well, if that's how you feel, you know, literally he said, you know, to the effect of, even if he holds us to this, we're going to, you know, judge him on judgment day. And he's not okay with that. And he's going to release us of it. And, you know, we're just going to walk away. And so he was really good to talk to. However... Kevin King: Would you believe that when he said that? Or were you just... Speaker 2: I didn't know whether to believe it or not, but I at least knew that we're getting there. But Thrasio wouldn't accept that, of course. Kevin King: Right? He found God. It's going to be okay. Speaker 2: Yeah. So Thrasio said, okay, that's great, but we're going to need to come up with a mutual settlement agreement that kind of releases The IP infringement upon you and basically we're not going to sue you. You're not going to sue us. We can both exist and this is going forward on this one design. So like it's not preventing him from getting a patent on something else. It's not preventing Thrasio from getting a patent on something else. But for this particular design, we can both exist in the marketplace and he needs to sign off on that. And Horacio came up with a whole lot of legal stuff to do it. And I was so nervous presenting it to this guy who kind of wanted to do it on a handshake. And he was good. And he made us add one clause to this mutual settlement agreement. And I pulled it up. I'm going to read it so I don't get it wrong. But it basically says that Brian and his family agrees to hold no charge against him in the day of judgment. And so that clause... Kevin King: That's in the clause, isn't it? Unknown Speaker: It is. Speaker 2: And that was important to him. And of course, we were fine with that. I mean, he saved it for us. Speaker 3: No, it was his religious belief, I think, his deep connection to God that literally saved our business. I remember him asking Brian, do you really think that I'm being unfair? I remember it was a text and we're staring at him like, what do I say? What do I say? Cause we knew how we answer that is going to break or kill the deal. We stared at a text over and over again. And I think finally Brian said, yes, you're, you're being unfair. Kevin King: What do you think he got? Do you think he got the patent to actually knock the rest of you off or do you think he, because it sounds like he's like regretting it now or it sounds almost like he's like was naive to what the impact was or something. Speaker 2: Yeah, so I think part of it goes back to, you know, in the online space, so I don't brick and mortar stores before and when there was a problem, you know, You kind of dealt with it in person. So whether it's a problem with the town or the health department or the assessor's office, you kind of dealt with problems with people and you could work things out. In the online world, we're all faceless. We send emails and we get mad at each other and our competitors. Unknown Speaker: They're just other people. Speaker 3: They're families too, they have kids, they have moms and dads. Speaker 2: And I think literally just having a conversation with him and us both realizing, hey, we're just both trying to make a living, we're just running a business, we're not out to get you, hopefully you're not out to get us. So I think that was key, just talking to him. And his reasoning, which we didn't know at the time, so when he first started in business, A patent was filed against his original design and also started by the factory. So like he had kind of gotten screwed in the beginning of his career and I think he probably did this to protect himself and he finally had got it issued and it was, I'm going to take everybody down. And again, I think it's because We don't think of everybody as people. We just see it as it's a business. I'm going to take them down and I think honestly just having a phone call with him and some emails back and forth just maybe made him realize that, huh, would I do this to my neighbor? If this was a competing business in town, it would be usually handled a lot differently. Yeah, I mean, I think that's it. I mean, so two lessons from it is like, we're all people and every problem can be solved, you know, and don't give up. I mean, we tried every route. I'm probably leaving stuff out because it was just, how are we going to fix this? Speaker 3: How are you going to fix it? I didn't do any of it. All credit goes to him. Kevin King: So he didn't really steal half your business then. He saved you this. He deserved that half. Speaker 2: I came through in the end. Kevin King: So during those two weeks that you're down, basically, how did that affect sales? I mean, two weeks of no sales is going to definitely hurt you as far as ranking and everything else. Did it recover? Speaker 2: It recovers really quick. So in terms of This brand just worked through all the suspensions that we ever had because we had multiple throughout the time. We never really lost ranking. It picked up really quick and when Thrasio bought it, they still got a growing good brand. Kevin King: What happened to the brand? Was Thrasio able to grow it more or did they end up tanking it? Speaker 2: In the first year, so at the beginning, so we had some. Speaker 3: We were still in touch with them because we had money on the line, like earn out. So we were still in touch with them. So we have access to like some of their backend. Now they were, I think they were doing close to the 8 million that first year, right? More than that, 8 million. They had a deal of the day. We all know how big deal that is. They had a deal of the day, completely sold out within hours. So I don't know how many units they sold out, but I'm sure it's a lot. They had to go to the day they were going to do 8 million that first year. Speaker 2: And they had a part of, so there was stress after the deal because of some earnouts that we had and they ran out of inventory month to a three of owning it. And that was after us having weekly meetings with them telling them you need to order more, you need to get, get this in stock. It's going to take time. And it was weird because those are the things that we assumed that giant company is going to be really good at. And they were letting things run out and we're, we're still in touch with Joe Valley at the time. And we're like, this is going to really affect like things down the road. We're not going to get paid. Kevin King: Um, what percentage are now? Speaker 2: Did you have like 10, 20% or was it, um, we had like a performance bonus and then some kind of, it was maybe, 10, 20, maybe like 15% because there was two separate ones and we ended up getting them all. So it all worked out. They were really good to work with. Speaker 3: They were. Speaker 2: I know there's been, you know, unfortunately bad stories of people not getting their notes as well, but for us, for them going through what they did with us in due diligence, And then they fulfilled on everything they did. But in the first year, yeah, I think they got over 8 million. So it was still growing like, you know, rocket fuel. And then now it's gone. It's gone. Speaker 3: Yeah. Kevin King: Yeah. Speaker 3: They killed my baby. Kevin King: Killed your baby. So what did you, did you start another baby after that or what did you do? Did you take that money and go on a nice trip and or buy something nice for the two of you or did you, let's do this again. We love fighting Amazon. Unknown Speaker: What did you do? Speaker 2: We closed and finally once escrow was released, it happened on the day that the stock market completely crashed because of COVID. Speaker 3: That was the day the seven figures hit my bank. Speaker 2: And for us. Unknown Speaker: Oh, it was like Christmas. It was like Christmas to me. I was buying all kinds of stock. Speaker 2: Yeah, so that worked out well for us because stock markets tank in. It crashed. Speaker 3: Oh, I loved it. Speaker 2: And so we bought some stock. We eventually bought some real estate, but we went right back into e-commerce. Speaker 3: April, we bought a new company. Speaker 2: Yeah, so we told Joe we're still looking. Janine emailed him and said, hey, we're still in the market. We want to buy something else. Keep throwing stuff our way. And he said, well, so this was a good one. So he sends us an email. And he says, I have one. It's not launching yet, but I'm talking with them now. He said, it's got overblown ad spend, bad margins, and it's on a decline, and I don't recommend it for you. And we're like, hey, we want it. Speaker 3: I looked at it, and I was like, I want this. Speaker 2: But it was, besides those things, it was doing almost $2 million in revenue. It had awesome branding. Everything about it looked good, but the previous owner had just scaled too fast, grew it too fast, using too many agencies, spending too much off of Amazon. He just way overspent and got himself into a hole he couldn't get out of, but we bought, you know, a $2 million brand for under $40,000. And he lived nearby too, right? Kevin King: He didn't. Speaker 2: No, no. Kevin King: Okay. So a $2 million brand, so it was a fire sale basically. He just needed to get out. Speaker 2: Yep. Kevin King: I'm assuming if it's $2 million brand and he got in over his head, he owed more than $40,000. Speaker 2: So we purchased inventory and stuff. So the sale was about 40 grand with the inventory. Kevin King: So the inventory purchase let him pay off some. Yeah. Okay. All right. Speaker 2: Yeah. Kevin King: And then what's happened with that brand? He's still running it now or? Speaker 2: We are. Yep. So we. Cut a ton of expenses, got it profitable. She keeps saying six weeks. Speaker 3: He was unprofitable for five years. It only took us six weeks to make it profitable. We just cut out all the stupid stuff. All the agencies. He was in Amazon Poland, Amazon Germany, Amazon France, Amazon Italy. We cut all of that. He was spending over a thousand bucks on inventory softwares that we got rid of. I mean, he's got like 10 SKUs. What do you need three inventory softwares to handle three SKUs? I mean, 10. And we raised prices. I spent two weeks. I did nothing else except spent two weeks in his Amazon ad. It went from like a 40 something percent A cost down to like 20 something in two weeks. Kevin King: An agency had been running it before? Speaker 3: Yes, two agencies had been running it. I can tell from the name of the convention, they had been two hands in the bucket. But yeah, it was 40, 50, 60 ACOS, so that's not profitable at all. It took me two weeks to bring it down to about 20 something. Speaker 2: And there was a lot of off Amazon, so Google ads, Facebook ads that weren't converting, so he was just spending and he was trying to grow. He did a lot of things right in building the brand, he just didn't run the business right. And when we cut a lot, we did lose sales. So we've kind of, we're at that close to 2 million. It dropped in the next maybe year or so back down almost to a little over a million. And now we've brought it back up to that 2 million at the same like profit margins that we were, that we got it to. So it's doing really well. So it's on a slower growth. But now we're profitable and we're profitable in a pretty good way, so. Kevin King: So are you looking to hopefully exit that one at some point or are you just having fun with it, something to do during the day? Speaker 2: Yeah. Speaker 3: That was something we talked to Perry about in the last three days at Breaking Point. Speaker 2: Yes, we don't know. So our goal was, you know, you have an exit, right? And then everything was like, well, our next one has to be bigger than this one. And we thought with this brand, because this brand has, I think, more potential. It's not a scary brand where it's getting suspended. There's no safety complaints. I don't think we'll have IP complaints. There's no stress in it in terms of like the Amazon, the typical Amazon stress. I mean, there still always can be suspensions and they break up our variations and there's still Amazon crap. But it's much more of a brand and we felt really good about really scaling this. But it's hard and after talking to Perry, we don't know. We're still always open to sell a brand. I think that's always our goal is to kind of build it and sell it, but it puts off some nice cash every month. That's how we're living. Kevin King: Do you live off the Amazon brand or you said you have a bunch of real estate, some Airbnb or something? Or is that just a pure investment? You just keep reinvesting that and you said you did well getting on the low end of the market with some stocks. Is that just all pure, let's just live off the Amazon business, everything else, we're just growing for the future? Speaker 2: A little of both, but the Amazon brand is most of our income. The Airbnb businesses is doing better and better. We just hit a number the other day that we didn't even believe. We're like, wait, because we're kind of just compiling all the stuff we're doing. And we're like, wait, are we really making that much from that? So that's grown because we have four properties of our own. And then we started managing other people's properties in the area. And we do it as like a co-host. So we're getting percentage of their revenue. That's turned into a great business. Kevin King: That business has become pretty competitive though too, hadn't it? That was a hot thing where people were selling courses on how to get in the Airbnb business. Amazon was the big thing everybody's doing webinars on from like 2014 to 2017 and then it became Airbnbs were the hot thing. That business is still okay? Speaker 3: Kind of like depending on the product on Amazon with Airbnb, now it's depending on the location. You know, don't try to get into, you know, Orlando. Don't try to go into Kissimmee in Florida. Like certain area, don't try to do Joshua Tree in California. Certain areas have had their time. It's gone. It's come and gone. But there's still different pockets that are developing around the country that's in the up and up. You just got to find those pockets. Kevin King: Is it a lot of, I mean, so you basically set up a management company then to do that or you're doing it yourself or you have a management company that's like, air conditioner's not working or I lost the key. Unknown Speaker: You're looking at the two managers. Speaker 2: We're doing it all and it's, it's pretty manageable. We don't have, we have a total of 10 properties between ours and co-hosting and it's still, it's, it's very. Speaker 3: Hey, remote. Speaker 2: Yeah, we're doing it from our phone or the computer. I mean, most of its messaging, we have contacts in the area. So we have cleaners and handymen and electricians. So it's really just about answering, answering messages. You don't do a whole lot of promoting because it's on the platform. It's kind of like putting it on Amazon. We put it on Airbnb or Vervo or whatever. There's things you can do to help with rank but it's not like we're having to drive traffic to these sites. It's just a lot of management and it's pretty profitable. Kevin King: Have you been actually to all of your units? Have you actually walked into them all or some of them just totally remote? Speaker 2: Yeah, no, we go to all of ours. We started it when we sold the brand, we bought what we bought as a vacation home and we wanted to Airbnb it just to break even. We're like, if we can have this house, we have friends in the area. Speaker 3: We were going down there a lot. We were going down there a lot. Speaker 2: Yeah, so we travel to Florida often and if we could have this place to go and it was going to break even and we just had a free place as equity went up. We're cool with that. And then we started noticing like, hey, we're blocking this thing a lot. Look at all this money we're losing. So let's buy another one. So we bought another one and it's kind of just rolled from there. But we go, we still go often to all the properties. Kevin King: I have a nice place here in Austin. There's times like during F1 or South by Southwest or something like that. People say, Kevin, you should, I'm on rainy street in a very good location. Um, and then you should just rent that out for a week. You could get 20 grand or something probably for the week. for your penthouse. And I'm like, I just don't want strangers like coming in my, you know, messing with my stuff. So I will always wonder, you know, it's not necessarily your personal stuff in a lot of these places, but people just, they don't care. It's not theirs. Are they trashing it, stealing the Sonos player that you left there or whatever? I mean, what kind of, what kind of, you talked about the Amazon space or the listing suspended and the troubles you got through. I'm just curious, what's a common thing in the Airbnb space that's just like, God damn, not again. Speaker 2: People definitely don't take care of your stuff. You're pretty well protected with Airbnb, so they have something called air cover and it's just an insurance. You know, if they break anything or stain something that you can't get out, you can, you know, just file a claim and they're pretty good about paying out. But we've been, it's gonna depend on the area. If you're in Austin during an event and it's people coming to party, that's gonna be very different than, like our area tends to attract. Yeah, families and couples that are in their 60s. It's not a super touristy area. Speaker 3: It's not like a party town with all the college kids. It's nowhere near university. It just really depends on where you are. We've had like what, 600 bookings at this point. We've had like maybe one family cost $1,500 worth of damage. But other than that, It was just a little, you know, like, oh, they break the shampoo dispenser in my bathroom. The toilet's not working. Oh, they broke the bottle of salt and pepper shaker. They stained the sheet. They stained the blankets. I replaced those. It's mostly just, yeah. Or they stained the carpet. I just buy a new one. I would not be scared of it unless you're in like party town somewhere near university. That might be a little different. Kevin King: So what's next for you guys? So it's just keep buying more Airbnbs and growing the Amazon business or what's next? What's the ultimate exit plan for you guys as a couple? Speaker 2: Yeah, I don't know if we have an ultimate one, but right now we're looking to start some IV hydration clinics and because we're both pharmacists. Kevin King: Back to your roots. Speaker 2: Yeah. And we have never, neither one of us. So in any of our businesses, you know, little side hustles and whatever, it's never been anything to do with medical. And we're always like, why? You know, I think we just got far away from it and we're like, we don't really want to do that. But, We're users of that type of business, so we think the healthcare space is growing, IV hydration's growing, so we're looking to purchase a place that's in our town and we'd like to have multiple units. Speaker 3: I want five in the next three years. So we do that, we still do the e-com thing on Amazon, we still do an Airbnb thing, I wanna add one to two properties a year, maybe add another e-com brand, I'm not sure, and then there's that IV thing. Kevin King: And all this, it's just the two of you, you don't have a team? Speaker 2: No. Speaker 3: You're looking at them. Kevin King: That's awesome. That's awesome. No VAs, no nothing. Speaker 2: A little bit, yeah, but it's... Speaker 3: Like customer service VA, you know, we might pay somebody on Fiverr to do a graphics image, you know, pay somebody to, you know, do another graphic like for A plus content. We might pay some photographers to take pictures for us, but just like those little things. Kevin King: Yeah. Speaker 3: No one full time or anything like that. You're looking at it. Speaker 2: Until we open the IV hydration. Yeah. Then we will have nurses and staff. Yeah. Kevin King: Awesome. Well, I really appreciate you guys coming on today. This has been fun. This has been great. It's a great story. See, it wasn't so bad. It wasn't so bad. It was fun. You got to tell a really cool story and it was really good. I know you don't have anything to sell or anything to do, but if someone, do you want to share anything? If someone wanted to follow you or to look at anything or you just want to like stay behind the scenes and like, yeah, we're good. Speaker 2: Yeah. Speaker 3: I don't think I have anything. Speaker 2: I know. Nowhere to send anybody, but we're happy to talk to people. I don't know how they would. Kevin King: They got to come out to a Driven or maybe we'll see you at another BDSS event or something in the future. Speaker 2: Yeah, we definitely will. Speaker 3: Come say hi. Don't be shy. Kevin King: Maybe you'll be in Iceland in April. Who knows? Speaker 2: Yeah. Kevin King: Awesome. Well, appreciate that. Appreciate it again, Brian and Janine. Thanks. Speaker 2: Thank you. Kevin King: I'll see you at the next Driven. I think Brian and Janine's story is a lesson of never give up. As tough as Amazon can be at times, as frustrating as it can be, never give up. Overturn every rock, look under every path, go down every way you can to actually try to solve a problem when it comes to dealing with Amazon. And sometimes it can mean millions of dollars like it did in their case. We'll be back again next week with another episode of the AM-PM Podcast, gonna be another good one, so don't miss that. Also be sure you're subscribing to my newsletter, BillionDollarSellers, BillionDollarSellers.com, one of the top newsletters in the entire Amazon and e-commerce space. People are loving it. If you're not a subscriber, you're totally missing out. BillionDollarSellers.com, new issue every Monday and Thursday. Also be sure to check out the Freedom Ticket I do on Helium 10 as well as Helium 10 Elite, which I lead every month with an online training and we do a little mastermind call with myself every single month too. You can check that out at h10.me forward slash elite. And before I leave you today, I've got some words of wisdom for you. You know, you can never cross the ocean unless you lose sight of the shore. You can never cross the ocean unless you lose sight of the shore. See you again next week. Take care.