So, the first thing is to have a great product, what’s the next thing?
The next thing is to have great photography. Not good photos, not the best you can do, but great photography.
The best that you can possibly get. If you look at AirBnB for example, one of the decisions they made early on was to send professional photographers to the homes to take photos. In the beginning, people weren’t booking because the photos weren’t good enough. As soon as they started offering that to the AirBnB hosts, their business took off.
Another flaw in the course gurus is that they sold Amazon short. They said you can come in with $1000 and be making $30,000 a month in six months and that’s just not true. What Adam tells people is that is you can start with $5,000 and in the first year you can rotate that money at 30% margin in a year, that’s a win.
Warren Buffett is the greatest investor in the world and one of the richest men in the world. If you look at his record he is trading at 20% a year. If you’re doing it at 30% then you’re doing better than Warren Buffett. As you get better you’ll be able to rotate that twice in a year then you’re doing 60%.
If you sit down with a compounding calculator and do the math on if you start with $5,000 or $10,000 you can see that you have an amazing vehicle at your disposal.
However, a lot of these “gurus” are telling people they’re failures if you’re not making $20,000 or $30,000 a month in your first year.
You mentioned that you started with 6 products and turned that into a million dollars a year, so I would assume that you put substantial capital into that.
In fact, it’s at $1,000,000 a year “run rate”, ie, it now turns over about $83,000 a month.
Adam figures that he started that business with about $60,000. This was a different company. He has a completely different brand that he’s been running for about three years and he started that one with $20,000. At this point, he hasn’t taken any money from it. Except for a $20,000 loan from Amazon that he accepted just to see what it was about, he has been compounding that initial capital. Right now he has hundreds of thousands of dollars in inventory paid for in distribution center around the world.
The only other person I’ve talked to about compounding your money is Will Tjernlund. If you took that $60,000 and after a year turned it into $80,000 a month that clearly is a tremendous success. How on earth did you manage that?
Adam is experienced at this point, with his numerous business adventures, and experience comes from activity and time and anybody can learn to do that if you stick with it (learn more from Adam here)
The difference, according to Adam, is that Will farms a product. He’ll throw 20 or 30 products out there and two or three will be a hit. He clears the rest out and starts over.
Adam wanted to build a brand with a small number of products. He currently has six products with an average cost of $8 and retails for $40 with one about $129. Adam’s strategy is to build his brand around a few products and get them to page one and keep them there. Last time he checked, Will had around 1700 SKUs. He didn’t want to think about what that was like, to wake up and have to monitor 1700 SKUs.
How do you find potential products?
To be successful, it’s about paying attention to the details and being objective. If you look at AirBnB and everything that makes it successful, then reverse engineer that and unpack it to find every component, that kinda what you have to do with Amazon. For example, AirBnB hired pro photographers to go every single place listed on the site!
