Jun 3, 2020
Today’s episode is another show about incredible exits. We got the
chance to speak with Brian Lejeune and Janine Do. They chat with us
about their intensely difficult exit and the challenges they faced.
Tune in to hear our chat with Brian and Janine about their
experiences as entrepreneurs. Topics:
- Brian’s typical entrepreneurial journey.
- How Janine’s parents influenced her career.
- When they started to see sales.
- Why you shouldn’t get stuck on branding on packaging.
- Why there are no excuses for working less.
- When to consider the exit process.
- Why Mastermind groups are important.
- How much Brian and Janine made on their exit.
- Logic over emotion.
- How their level-headed nature was key to their success.
- Their emotional response to their exit.
right Joe, I know that Jason Yellowitz sold your business. I
actually sold Jason's business before he came on board as a broker
at Quiet Light Brokerage. I often referred to the story of selling
Jason's business to potential sellers to explain that sometimes
when you're in the process of selling and getting closer to that
closing date, anything that can go wrong will go wrong. And that
happened with Jason's business. His business that he was selling
these baby gates and dog gates. It had the worst three day period
of sales in its history and of course, the buyers started freaking
out; understandably so. This happens with deals sometimes when
you're in that due diligence period where all of a sudden all hell
breaks loose and you kind of have to figure out what's going on. I
know you just went through an incredibly painful exit with a client
who had that sort of scenario but it worked out.
Yeah, and it wasn't painful for me necessarily because I'm at arm's
length so it was okay but, Janine, I think stopped eating at one
point. It was that incredibly painful. I remember I was at
eCommerceFuel down in Fort Worth this year and we were about to
close and something went wrong. And I don't want to give the
details away here in the intro because you've got to listen to
this. What could have gone wrong; went wrong and to the nth level;
this is like deal killer, account close, things are over kind of
gone wrong but Brian and Janine; the owners of the business,
remained level-headed. Even though, like when I called him from the
ECF event trying to cheer him up and like, hey, how's it going
today? We got over this hurdle and I could hear it in his voice
something else happened. Like he was kicked when he was down on
this second hurdle that we had to get over and it was incredibly
painful. That aside, these two are incredible people. They are
pharmacists by trade. Janine has her PhD and she comes from a
family with six children, five of the six have Ph.D. They’re
immigrants. They lived in the projects in Roxbury, Massachusetts
and it’s just an incredible story all around; incredible story,
incredible exit, incredibly painful with light at the end of the
tunnel. And they're actually now under LOI buying another business
so it's a full story. They launched another brand, another business
before they closed this transaction and so they're already
generating another income stream and now they found an opportunity
where they're under LOI buying another business. And that's really
within 60 days of closing the last transaction so it's an
incredible story all around.
fantastic. Let's get to it.
Hey, folks. Joe Valley here from Quiet Light Brokerage and we've
got another Incredible Exits episode here. We've got Brian and
Janine Lejeune on the call. Welcome, guys. How are you?
Good. How are you, Joe?
Now, listen, we normally call this Incredible Exits but I want to
change that for this episode. We'll call it the Incredibly Painful
Exit for you guys because there were certain components of it that
were incredibly challenging and painful. And I think at one point,
Janine, you might have stopped eating if Brian was telling the
I stopped eating
and I stopped sleeping.
Well, good. Let's get a little bit background on you first. You
guys are both pharmacists by training, I believe, right?
I’m the one with a
doctorate degree though; he's only got like a normal degree.
So I need to call you Dr. Janine?
Dr. J, how about that?
more responsibility that comes with that. I keep telling her on the
plane when they if there’s a doctor in the house.
It's a Ph.D., right? Janine:
So I have a father in law that has his PhD and he said it just
stands for piled higher and deeper.
Yeah, that sounds about
loan debts when I graduated.
How incredibly painful, have you paid that off with the sale of
your business? Janine:
going to. But right now with the stock market doing some fun stuff
we’re putting some money there.
Cool. Good for you. All right, well, let's get the background and
Brian, let's start with you. Because honestly, Janine’s story is
much more interesting so I just want to get yours out of the way.
What's your story background; the business history, offline
business, and then online, I believe, right?
pretty typical in the entrepreneurial journey. I’m kind of been
dabbling in a lot of things for a lot of years. I went to college,
came out, and became a pharmacist. So that was the path I took but
even in college, I’m kind of always entrepreneurial and just always
looking for other opportunities. I think about maybe two years into
pharmacy I started saying, okay, I don't think this is quite what I
want to do for the rest of my life. So I started looking at
businesses; looking at local businesses. I bought my first business
when I was about 26, 27 years old and it was a tanning salon. I
knew absolutely nothing about the industry. I was honestly just
looking for a business. It was five minutes from my house. I
learned as much as I could from it and kind of grew it to a really
nice level where I was actually able to leave pharmacy completely.
And I left pharmacy for about seven, eight years, and in that span
opened up other salons, pulled some partners in, did some
distributorship. I did a lot of like brick and mortar type stores;
bought some, sold some, but have never sold them at the correct
time. Always kind of passed its peak like oh, we should sell or
something's going wrong with a partner and always getting out not
at the ideal…
A little too late.
Yeah, so that
was a big thing that looking at what we did that was my one goal.
Like, let's do this at the right time. You never know when the
perfect time is, but you just don't want to do it the wrong time.
True. When did you jump into the online space?
terms of jumping in probably not until like 2014, but a lot of
little things here and there; trying to start blogs, trying to sell
things on eBay or whatever. But that was very, very small. It was
always kind of like, oh, what can I do next? What can I do next?
But 2014, 2015 I kind of found the Amazon space…
Was it before or after the young lady sitting beside you, the two
of you met? Brian:
Yeah, so before. But honestly, I owe a lot to her because I didn't
really get super deep into it until she came along for sure.
Well, she does have her Ph.D. She's a lot smarter than you are.
I’m obviously smarter.
It just takes
me a little longer maybe.
Let's hear a little of your background, Janine. And do me a favor
and just tell everybody about the generation before you because I
think you've got a fascinating family story as well.
Yeah, sure. So my family
came here in 1989. My dad was 35 years old at that time; seven
kids, pregnant wife, no money, no English whatsoever.
What country did you come from?
We came from Vietnam.
Yeah, So he fought
with the American soldiers during the Vietnam War. He was of course
against the communist people so they put him in jail. Things were
just getting pretty rough for us back there and we got the
opportunity to come to this country and he decided to take the
chance. So he came in at ’89. He was 35. He’s making minimum
wage, raising a family of probably more even seven kids in random
age; so fetus to, I think 17 or 18 years old, maybe even a little
younger than that.
Any idea how much money the family had when you came to the
nothing. Not even like a ring that's worth anything. Besides the
clothes on our backs, we’ve got nothing more. My mom didn't own
anything that was worth anything. No heirloom ring or just nothing
like that. So we rely a lot on government help at the time. We
spent 10 to 12 years in the projects.
In what city? Janine:
In Roxbury. Okay, I spent some time up on Mission Hill myself.
Well, you know the
police station and radio station?
So I was five
minutes walking distance from the police station. That's like the
highest crime-ridden place you can think of in Massachusetts.
That’s where I grew
And you did this and managed to have how many PhDs in your family
now with all the siblings that you have?
Oh, so we have a
dentist, four pharmacies, three bachelor degrees, and one masters;
so [INAUDIBLE 00:10:27.4] more than one.
A true incredible American success story. That's incredible. No
excuses to my kids are now your kids that are second, third,
fourth, fifth-generation Americans that don't want to do the hard
work that you guys did. Janine:
Well, it’s tough to teach them and I don’t know how to impart the
same wisdom on them that my father did for us. But when I was
little he used to tell me if we see someone who was homeless on the
street he was like do you see that? If you don't do good in school,
that’s where you’re going to end up and it freaked me out. And I
actually believed him. I actually believe him so we are always
doing that in school; every one of us. So I was top in my classes
on like grade school.
Wow. And you still married Brian? That's amazing.
Yeah, and I don’t know
how this [INAUDIBLE 00:11:15.4] tricked me into in.
All right folks, I know these guys pretty well at this point. We've
gone through a lot together so, yes, I like to give them both a
hard time because they give it back to me as well. All right, so
your online entrepreneurial journey; and you were obviously a
pharmacist. You have a PhD but at some point, you and Brian met.
Did you already have online businesses before you met Brian or did
you jump into the space when you guys met?
Yeah. So since I was
like 16. My parents opened a restaurant and that's when things kind
of got better for my family. And so I saw the opportunity of having
a business would mean. I mean, literally, he opened a restaurant
and two years later he was out of the projects. He bought a house.
He bought this brand new Lexus. Somebody has always want to fall on
time. So from that, I see the incredible opportunity of owning a
business but I also saw how much it consumed my parents. So they
were always there. That's all they talked about and they're
literally there; sometimes my dad is there at four in the morning
to make this broth that takes six hours to cook. So I see how much
it consumed them. So I saw the opportunity in business but didn't
like the brick and mortar aspect of it. They were always gone. They
were always there. So I stumbled on eBay when I was 18 years old in
college. So this is 2002. I was struggling with money, so I looked
around my room; whatever was worth selling, I put on eBay. Whatever
I can get, like ten bucks I would do it because; you know a college
student, typical story. That's kind of how I got into the whole
online space and I just never left. I saw the opportunity. I was
trying all kinds of things over the next 15 years. I did a feel at
marketing. I tried selling cellphones. I tried selling used sports
shoes. I did affiliate marketing; just all kinds of things and they
made me a decent side income but just not enough to replace a
full-time job. And then when I became a pharmacist making over 100K
a year, it became harder to justify that $20 or $30 I'm making on
the side business. And then I met this guy who told me about FBA. I
didn't know anything about it. It was the first time I heard of the
word private label. I have no idea what that meant so he explain it
to me. We bought ASM. I think you had ASM3. So we got that and
that's how our journey began.
It was that
private label route that really kind of changed things. Both of us
were always selling other people's products or always looking for
that next thing to sell whereas it was like, okay we can develop
our own brand. And I had sort of done this in the tanning salon
world where like we were private labeling back in early 2000s a
line of skincare that we would bring into the salon. And then we
started doing tanning beds and we basically brought some tanning
beds in from Italy. We put our own name on them and we started
selling them to other salons. So I've kind of been familiar with it
but the Amazon thing really opened my eyes to kind of like okay, we
can do something really big. The volume is incredible. Get a good
product, get a good brand, and just try to blow it up and
fortunately, it worked out.
And you learned both the initial stuff through ASM3 I think you
said it was. Brian:
That's a while ago, right?
Several years ago and many variations since then. If somebody is
new coming into the space and let's say they're a pharmacist
working and listening to this podcast right now, what would you
suggest they listen to; courses that they take, masterminds that
they join, anything that you can recommend?
I think the most
important thing is to take action. There are a lot of courses out
there right now and I remember I heard one of the guys spoke on
stage and he was like; so this is speaking to the ASM crowd who all
paid and all wanted to be there and he said, I know 95% of you here
today aren't going to take action. I sat there and I thought to
myself, that's so weird. Who the hell spends that kind of money and
that kind of time to go there and not take action? I thought
there's no way that that's true because I knew that there's no
chance in hell that I wouldn't be taking action. But then over the
years, I learned that he was right. People just aren't taking
action. They buy these courses and then their brand is kind of like
they took it off as some I did it, kind of the same thing with when
someone signed up for gym membership in their brand [INAUDIBLE
00:15:42.9] release of you actually going to the gym, even though
you didn't and all you did was bought the membership. It's like a
psychological experiment I read about so much will buy courses and
in their brain is checked off as, hey, I did it. The most important
thing is just really to take action.
No matter which course, whatever it is just take some action.
Figure it out, get started, and learn from that experience. Okay.
So the business that we worked together on that you sold through
Quiet Light is in the electronic space. Is this the largest
business that you had gotten off the ground and launched?
Okay. All right, let's talk about that process a little bit. When
did you first launch this particular business?
So that would
have been the last quarter of 2016.
And did you use any particular tools to research the niche; like a
Jungle Scout or a Helium10 or anything like that?
Okay, do you recall how much your initial order was; how much you
spent on the first batch of products?
1,000 units so that
would have been…
Did you have the money in the bank for that or did you have debt
and use a credit card; what was your financial situation then?
Well, at the time I was
working overtime whenever I could so I literally sat there and
mapped out how many hours can I work overtime and how many hours
did I work and all that money gets put into the business. Because I
could justify to myself that I’m not risking my “own money”, this
is extra money. So I was starting over. I was doing like sidestep.
I was doing all kinds of crazy things. It was like the second order
that I had to use credit card and some of these loans.
How long did it take between; well, let's actually back up, when
you got the first 10,000 units…
1,000 units, $10,000, how quickly did things take off for you? When
did you start to see sales and then how quickly did you go?
It just started selling.
one started selling really good but it's a little bit unfair to
call it like that's when we started, because both of us had
products before that time that we’re marginally successful in the
sense that they would sell but neither one of us could make the
products profitable. So we got to decent volumes of we could sell
15, 20, 25 a day type of thing but spending more on PPC than we
were getting in and it never kind of went over that hump, whereas
with the electronic product that actually Janine launched, it was
up to 20, 30 units a day almost immediately. So it was kind of we
got sat there and we're looking, okay, what do we do next? And she
was trying to figure out because there wasn't a big bank account
that had all this money ready to go to invest. So she says, okay, I
think if I buy a thousand now and then I save up and I buy a
thousand, and she had literally a whole path of what she wanted to
do. And we sat there… Janine:
an ice cream shop.
We’re at an
ice cream shop and I said, no, that's not how you do it. You need a
hundred thousand dollars. We need to do a big order. Like that’s
it. This product is going to work. You could see it. It just didn't
take a lot of effort. It got bigger and bigger every day. And then
it was loans and credit cards and scrounging.
I thought he was insane.
He won that argument? He won the argument of more like spend a
You know I’m
sitting there and I’m like where are you going to get a hundred
thousand dollars; like what kind of overtimes do you think I can
work? And at that point, I’d already quit my job but I knew that he
was right. And this is why our partnership works really, really
well. He already knows how the business road works whereas I'm kind
of new to it. And this is whether you run a brick and mortar like a
tanning salon or online, the principles are the same; the cash flow
principles, how to allocate money, how to leverage debt. Those
principles don't change no matter what business you're in. And I
agree with him, even though it never occurred we would do it. He
brought it up and I thought he was right. So I literally spent one
day because when you apply for a loan, credit cards will know about
it and they're more like three reject to you. So I had one day off
of work. I sat there and applied to every single credit card that I
could think of and applied to every single loan that I could think
of and I scrounged around between credit cards, new credit cards,
and a cash loan I was able to come up with a hundred thousand
Wow. You actually pulled the trigger and raised a hundred thousand
too. So we have a lot of people that say, how do we raise capital?
How do I buy a business and raise capital? You just found a hundred
thousand dollars through cabbage and multiple credit cards just
like that. Brian:
And I kind of told her, I said money is not the hard part. That's
the easy part. I think we can all figure out a way to get money,
whether it's borrowing from family if you have to or credit cards,
whatever. The hard part was done like she found the product.
She found the product so getting to the point where you buy
Getting the money was always easier.
Okay, that's interesting. I'm mentoring some students at a local
college here and they had a hard time finding money to incorporate.
And they need to listen to this podcast and do what you guys did.
I said to them, I said look around, just sell something, you need
to do it. Come on. Brian;
And I think a lot of people get stuck on I have to set up this
first, I need a corporation, I need a logo, I need business cards.
And all of that is way overrated. I think people use that as sort
of a stalling mechanism. They need to get things set up, they need
to be ready and it's not true. It's sell something first and figure
out the other stuff after.
Yeah, I think I was at a
million dollars before I had a corporation before I was properly
set up, before like a lot of things. I don’t even have a domain, I
didn't even have a .com. I know you e-mail sequined, I know e-mail
list, I didn't have a brand, didn't have a Shopify present, I
didn't have any business card. I know a lot of people to keep
asking me for one and our packaging was literally this box that had
that background on, had a bunch of textbooks, and then on sit
Cinderella on it. It looks like someone just kind of like threw
It was just
the stock box from the manufacturer.
And just for the record, Cinderella had absolutely nothing to do
with the product folks. Janine:
Nothing at all.
My point is sometimes
you get stuck on these things. Oh, I have to get the packaging
right, I have to design this, I have to design that, I have to get
a domain, I have to brand register and all these things. I didn't
do any of them until I’m already well over a million.
All of it is
important but if you get stuck on doing that before you actually
have something to sell…
You have to get out of the game.
I'm curious. You had said you'd each tried multiple things and you
didn't get past 15 or 20 units a day. Were they all in the same
Seller Account as this one or separate Seller Accounts? How did you
manage that aspect of it? We’d always recommend separate brands for
separate seller accounts.
Yeah, so at
that time we both had our own seller accounts. But then the one
that we ended up building with was the one she had set up. And
there were multiple products in there and they were…
unrelated. A lot of like; it became like test products so like we
finally found the one that stuck and then that became the brand and
sort of just slowly fades out.
And the rest faded away.
Okay, so the biggest challenge you would say is actually finding
the right product and getting it to work, and don't let yourself
get stuck in the gate trying to get to be perfectly set up before.
Yeah. That and also, I
don't want to our story to make people feel like, oh, I need a
hundred thousand dollars or, oh, I need 10 grand otherwise I can't
get started. That's totally not true. If I hadn't had four products
that failed, if I hadn’t had four products where I spent all my
time; all the things I learned; photography, how to talk to
freelancers, going to Fiverr.com to hire people, how to write a
good listing, how to use Helium10, how to use all kinds of
software; I learned all of that but all of those products that cost
me like a dollar, a dollar 20 cents. I only started with a few
hundred bucks. That's when I learned all of those skills so when
the right product comes along, I'm ready to go. And I think that's
contributed a lot of our success. I imagine if my very first
product was a successful product maybe I wasn't ready for it and
maybe we wouldn’t have gone the trajectory that we were. So even if
you have 200 bucks to buy something that cost a dollar or two and
you may not make money on it, do it.
Education; right, you're learning along the way.
That 200 bucks is worth
Okay, so lots of failure or enough failure or mediocre success
before you head to the home run; the seven-figure eventual exit, so
to speak. So you found a way to raise money, not an issue for you,
as the business continued to grow were there challenges with cash
flow management trying to keep up with more and more inventory
demands? Well, you don't have a job any anymore Janine, you have an
income. Talk to me about those challenges and how you overcame
there were definitely challenges but it became; so she had left her
job, I was still working for about a year. I left in the end of
2018 so now neither one of us are working in pharmacy but during
2018 when the real growth really started to happen, it was always a
struggle to order enough to grow because we're growing 30%, 40%,
50% month over month. It wasn't slowing down so it was always
trying to stay one step ahead with inventory. We use Amazon lending
extensively. So, I mean, we started with the smallest. They offered
a thousand-dollar lone, we took it, and then every time we paid it
off, the loan got bigger and bigger.
Do you always have to wait for them to offer or is there a way that
you could… Brian:
Yeah, and as far as I know, the offer is the offer. There's no
So you take it, pay it off and then you're going to get a…
Yeah it was really
stupid. The first loan for a thousand dollars I would have done
anything for us. We were already doing; I can’t remember the exact
number, but at least maybe 50 or 60 grand or maybe even a lot more
than that. So I remember looking at it and thinking to myself, what
the hell is this going to do? Why is Amazon giving us such a cheap
ass loan like a thousand bucks? But we took it and it went to 10
grand, it went to 70, and it went to 300,000, 500,000. It ended up
over 800,000. It just gets bigger and bigger.
So if you get an
offer even if it’s 500 bucks or $100, take it.
they’re short term loans so they're expensive to have on your
books, but it allowed us to fund the inventory and fund the growth,
and it worked out well. Like going back there would be no other way
to grow the company too. So when we sold it was almost at five
million a year.
Okay, let's get to the niche itself and the incredible painful exit
as opposed to just incredible. It's incredible, no question about
it. The whole story is amazing and inspiring and hopefully, it's
going to get people in that starting gate to getting out of it and
taking some actions; looking around the room and selling whatever
they have to, working more hours. I mean, when I was a kid, I was
complaining that I didn't have enough money. That was kind of to
the millionaire next door, the best friend of my parents. I never
know that they are, but they were. And I worked for the company and
instead of staying I’m like [INAUDIBLE 00:27:34.5] where I said at
some point I was in the room complaining I think probably as my
parents were playing Chinese checkers which they do. And he said,
just stop your whining. There's plenty of work. Just go work more
hours. There are lots to do. Work more hours. And that's exactly
what you did Janine. You do the math on how to work more hours so
that you can fund that $10,000 purchase. So no excuses, people, if
you want to be an entrepreneur, that's what you got to do. All
right. So why the electronics space? It's a space that we talk
about in terms of risk and that's risk of obsolescence and again,
it took me a long time to learn to pronounce that but it means that
there's a fear that the product will be outdated someday in the
future with changes in updates. So why the electronic space, what
attracted you to that?
I don't think
there was a lot of thought as to that we want to go into
electronics. So it just came from product research and finding a
good volume product that didn't seem to have a ton of competition
that seemed to be somewhat new in the marketplace with already a
lot of volume. So it kind of checked all the boxes that we're
looking for. Also, there's a lot of training and there's a lot of
categories, there's a lot of products, there's a lot of things that
they tell everybody to avoid. We tend to; especially now that we've
developed a better skill set around this and we have more
We do the
opposite. Brian; Yeah, we
do the opposite a lot of times. Don't always avoid because guess
what? I mean, the space is already crowded but the things that
everyone is not avoiding, everyone's in those. So the ones that
they say don't avoid and maybe it's an oversized, maybe it's
electronics. If it still seems like a good opportunity, go for it.
Take it. Brian:
Yeah, I don't like to use like a definitely do not do this.
All right, so launched in 2016, 20 million in revenue before you
ever incorporated, at what point from your experience selling too
late; at what point did you say to yourself, okay, we're going to
exit this. We're going to talk to me, talk to Joe, talk to
somebody, and learn about the process of selling the business. How
long was it and how far in advance do you think other people should
consider the exit process or the training or planning, as it's
always say they won, right?
Nobody ever does that.
No, no one does.
I think as
soon as you know that you have a business. So, I mean, it can't be
day one because maybe that's never going to go anywhere but as soon
as you sort of maybe feel traction, you've kind of built the brand,
it's still growing, and you see like an upside to it maybe start
planning. Definitely from the day one keep your books good. That
was a major thing.
Remind me, did you use QuickBooks or Xero?
And did you outsource to a bookkeeper eventually or do you do that
Eventually. So we're doing it. I was doing it myself and then when
we sat down with you, that was kind of one of the things you helped
used CapForge and they were awesome. So they went back and had to
recast all the books to the accrual method. So that was a little
long, tedious, painful.
probably more expensive doing it that way than to just keeping it
correctly from the start. But, yeah, I think just planning is
always better, of course. So as soon as you think you have a
business, I think you should at least have it on your radar because
who knows? I mean, we're all in this to make money. You own a
business to make money and if selling it is going to make you
money, that should be part of your plan.
Yeah, so one of the things; I would just try to shift everybody's
mindset. Everybody's always called it plan to sell your business
the day that you started exit planning, flip it, and call it
training because you're learning. You're constantly learning by
your failures and in launching new products until you hit that
right last one that launched a seven-figure exit. Think about the
exit planning as training as well. If you're going to run a
marathon, you've got to train for it or you're never going to get
out of the gate. You've got to learn about the process. You're
listening to this podcast so that's a great start. Get a valuation.
Look at other listings and how they're valued and how the packages
are put together. Train as much as you can. Don't make it your sole
focus and your mission, but make it part of your overall business
plan and operating your business so that you can eventually exit
before you get burned out and things turn the wrong way and it's
too late to exit at a strong value.
I think the idea was
initially planted in our heads when we had our initial conversation
with Ezra on our mastermind group. And then that brings me to
another point, the importance of having a mastermind. Brian and I
are always a part of masterminds. Sometimes we’re in two different
masterminds. Right now I'm in three different masterminds, but
having a group of people that you can talk to is like super-duper
important. So Ezra we talked to him, he planted the idea in our
head. We connected with you to get the initial phone call with you.
I love that you were not fishy at all. It was just very
informative, very casual when we got to talk with you. And we got
off that day and we decided, yeah, we're going to do this. But it
took us six months to get everything set up; all the books probably
correct but it's never too late.
And like you
said about an education, going through the process, I think allows
you to learn how to run the business better anyways. So even if you
were to keep it, you should be in a better position after going
I agree 100%. Brian:
Even going through the sale there were things that we learned. So
during due diligence, it's like you get asked a question or someone
else organizes information in a different way and you say to
yourself, oh, I wish we did that before. But now guess what? We’d
do it next time. So our next business, we set up a little
differently because of things we learned by being exposed to the
Right. Did you make more money on the exit than you made while you
were running the business?
50% of all the money you ever made, 90%?
Cash flow is
a funny thing. So there was a lot of money flowing through our
business but in terms of what you end up with yeah, I definitely
think the exit; I don't know what percentage, but yeah, a big
amount of what we actually ended up with was from the sale.
Total earnings. Janine:
month I’m like where's our money?
We had Like 300,000 to
400,000 monthly sales so I was like where’s all that money?
laugh as we'd wire money. We’re like the Chinese they're taking all
our money. I’m like why do you keep sending it to them but yeah.
So the exit is when the
cash came down and it definitely…
And it comes at a lower tax bracket too.
It does which
Very, very helpful. All right, let's talk about the painful part of
the exit. So we were a couple of days away from signing an asset
purchase agreement with your buyer. The CFO of the company bought
your product and his wife plugged it in and it started to smoke and
catch on fire. Janine:
think it caught fire, it just smoked.
Just a smoke; okay a minor technicality.
Yeah, and not
a few days before it closed it was literally…
The day of.
The day of
that we were supposed to close. Yeah.
When details in your life are incredibly painful, you remember them
very, very well.
You guys can remember exactly where you were when you got that
e-mail or phone call, I imagine, as well. But we overcame that. We
were able to sort of get over that hurdle; get around that hurdle.
Can you address how that was overcome?
exact how so we had a lot of confidence in our product and in our
business and we didn't feel that the buyer had that same
confidence. And I think that's normal, right? So they don't know
exactly what they're getting. There’s always going to be maybe some
reservations, especially like you were talking to electronic
product obsolescence, safety hazards type of thing. But we had kind
of built it, we had huge volume, and, of course, we had problems
along the way that we were always able to overcome and solve. And
every time we overcame them and solve them, the company just
continued to grow and grow and grow. So all that I felt was like, I
just need them to believe in the product. And we kind of really
structured the deal to make them feel a little bit more
comfortable. We were willing to take a little bit more of the risk
on some contingent payments but we're completely willing and
confident do that because we kind of know where I think this
product will go. And the company that bought it I think can grow it
way beyond where we would. So we just needed to kind of instill
into them that we're confident so we'll take some more risk and I
think it worked out. I think it was a really good negotiation.
Yeah, I think they've done well with it. They started to grow it
immediately after closing. And with COVID more people are staying
home and more people are buying that particular product anyway so
it's a double whammy for them. So what would you did was shifted
some of the risk into contingent payments, meaning that you got
paid three months out if things were stable or six months out on
another payment. And you also shared some statistics, too, though,
in terms of the total number of complaints you had in that regard.
And then I think they did a little research in terms of looking at
other similar products in similar categories and seeing that
complaints were pretty similar and in some cases even higher.
Even major brands had
the same problems. Apple, Google, and Samsung that fiasco with the
cell phones like [INAUDIBLE 00:37:55.6] with the batteries
exploding on airplanes or something, it's not unique to our
Right, and I think that's what we just needed to kind of work
through to make them feel more comfortable.
And you did it with logic and level emotion. You didn't go off the
rails, you didn't scream and shout, you didn't…
Well I did.
Well you did that with Brian, you didn't do it with the buyer.
very patient and I don't give up and I knew that it could be solved
and it was something we could overcome. I was confident that we
I thought it
was over. Brian:
Honestly, I wasn't
eating. I thought it was over and this guy is very level headed. He
sat on his computer, thought about it, sent out an email
negotiating, and they accepted it.
They did. They love the logical approach and that you put some risk
on you. At the end of the day, you're still going to get paid out
but you said, okay, look, I'm going to take some risk just to prove
to you that this is not an issue, But the next problem, wow, it's
almost one that you could never be able to overcome. So I remember
I was at eCommerceFuel down in Fort Worth and I took my phone and
checked in with you, Brian, and I’m like hey man how are you doing?
You were like, yeah, I'm not so good. I'm not so good. I’m like
come on, we're getting close. We're almost there. He's like, well,
we just got hit with an IP infringement and all the ASINs are down
or all the top ASINs are down.
So someone else ended up getting issued a utility patent on…
Design patent on the primary SKU; you’re hero SKU essentially
because you had pretty much a hero SKU here. How did that feel?
So this happened on the
same day that we were supposed to sign; again like we can't even
make this up. I remember waking up that morning to an e-mail from
the buyers saying hey I’m looking forward to closing today at two
o'clock or something like that.
And I saw my other
e-mails from Amazon that was sent at five o'clock that morning to
tell us our ASINs are down. That literally happened within seven
hours the same day.
Yeah, so it
was sort of like we got this other problem behind us. We're feeling
good and literally the business; I mean this couldn't have been any
worse because it went basically to zero. And they took down every
SKU except for I think two or something like that and they weren't
top-selling SKUs. So I think we went from like $12,000 a day to
about a thousand dollars a day overnight and no path to see it
None, whatsoever; it was a patent issued by the US government.
Janine, did you say those emails came in from your buyer and from
Amazon within about seven minutes of each other?
Seven hours of each other. So seven hours and the loss of seven
figures; pretty painful. You're pretty down and basically like you
got kicked somewhere that would hurt really bad. Brian, I'm talking
to you. But again, levelheadedness, you reached out to your Chinese
manufacturer. You looked at the dates, you looked at the history,
you looked at whether or not this is patent was issued legitimately
or fraudulently; meaning the guy didn't fully share everything with
the US government; the US TPL that he should have. What did you
find when you did all that research?
So he had
sort of, after the fact, applied for a patent. So we had the
product selling in the marketplace first, but there were others so
it was shortly after us where there was maybe five or six of us all
selling similar designs, same exact product. It never even really
crossed our mind that it was a patentable thing because we didn't
design it. We purchased it as a private label thing, had our logos
put on it, did the packaging, yada, yada, yada. So did this other
buyer, so did lots of other buyers. About a year; so after we’re
already over a million dollars, he applied for design patent. The
path he took was… Janine:
Yeah, a little bit devious; claiming rights to something that he
really didn't have rights to that was prior on this space but none
of that sort of matters in the Amazon world because he did actually
get granted the patent and Amazon is not going to rule on whether
or not that pattern is valid or not. One thing that I did quickly
was contacted some of our other competitors. So almost immediately
I think we emailed… Janine:
were also taken down.
Yeah, so we
tried to reach out to our competitor that took us down, but then
got no response. And I reached out to other competitors and we kind
of all worked together. We're all doing our own research. We all
had our own lawyers. And I think that little pact that we formed,
in the end, helped as well. Because it was a lot of us working
together, even though we're competitors, we kind of all had had one
thing to solve. And yeah three weeks; I mean, this was a lot worse
than the first thing so this one actually took a lot of time.
It appeared by all imagination as something completely
But you did, you banded together with your competitors. You also
reached out to your manufacturer to reach out to them and put a
little pressure on them as well. And you eventually got in touch
with the patent holder. I’m cutting this short a little bit and
telling the whole story because it's long, folks and it was
painful. A lot of e-mails back and forth, a lot of negotiations, a
lot of okay, I'll think about this and I'll get back to you and
then not hearing back for days on end.
And I got on
the phone with them. I actually was able to speak to them and tried
to work it out as just two businesses competing in the same world.
It didn't seem like it was going anywhere. It wasn't working, but
it did. Finally, cool heads prevailed.
And so at one point, that conversation led to, okay, I will allow
Amazon to put your stuff back up and that's good. So your stuff was
back up and selling on Amazon, but your buyer really wasn't willing
to close because that issue was still out there, that this person
had the patent and they could shut you down at any time. We worked
with a buyer who was very good about being patient, understanding,
and all this. A lot of buyers would have just walked away. In this
situation, they hung out. They hung around. They trusted you guys.
They saw the commitment you were willing to put in by putting some
risk on your side. And they said see if you can work it out. We're
good. And one of the other things that you did is you said, look,
we will backdate this asset purchase agreement. Let's go ahead and
get the APA signed contingent on getting a mutual release of the
ability to sell the product now and forever on any platform and
being able to transfer control of that right to sell the product as
well but backdate it. I think we ended up closing in March, but we
backdated you said effective, I think January 31st
far as the asset purchase agreement. So you are essentially
managing the business, not taking any money out of it, and if we
were able to close the transaction, you essentially had ended up
managing it for the buyers for 45 days or so. So, again, you're
putting yourself out there saying, look, we're here, we're going to
fix this and it's yours as of that date back there but we're going
to run it until this problem is solved and we did. We ended up with
a mutual release letter. There was the strangest possible clause in
a legally binding contract I've ever seen. We won't go into the
exact details, but the buyer's attorney said, I don't think this is
enforceable. And I said, really?! Absolutely just a little clause
that this person needed to make himself feel better perhaps in the
afterlife and we don't know if you could enforce that in the
afterlife or not. But the key is that that you worked with him
closely to accommodate his personal needs and your own personal
needs and you got through it. You remained level headed. And at the
end of the day, you wound up with a seven-figure exit. I want to
know how you felt not when we finally got that release letter but I
want to know how it felt when that first wire eventually hit your
It couldn't have;
so right now we’re going through COVID-19, I don’t know if you
remember, but on March 17 was when the stock market dropped by 20%.
The whole country woke up and the stock market was down like 20% or
more and that was the same day we got our seven-figure finally
hitting our bank.
couldn’t have closed at a better time. I mean it put us in such a
good position. Obviously, we'd been waiting for it for a long time
so it was a relief but timing was just incredible.
Although the buyers seen a spike in sales because of…
I mean, we,
of course, follow it very closely.
Oh my God I font know
how they are doing it.
they're up over 100%. I mean, they're growing. It's awesome.
They're growing the way we thought they would. They have the
capital behind it. They've got a good, strong team to put behind
it. So, I mean, we know…
Are you excited for them. Are you glad; you just said it's awesome,
are you...? Brian:
Oh, it's so awesome. Yeah.
Right. So, folks, that's the mentality that will get you a better
value and a better deal and a better transaction. Because Brian and
Janine ran this business and created something that would be great
for a buyer to take over. And a buyer saw that took it over, and
now it's up over a hundred percent. Yes, COVID is having an impact
but even without COVID, it would be up substantially. That is
absolutely the right mindset to have.
[INAUDIBLE 00:48:35.2] Like that brand even if we potentially could
grow it to, say, 10, 20, 30 million dollar brand, I honestly don't
think we wanted to. Like that wasn't our goal. We didn't want to
have to leverage ourselves to get there. Take the extra time.
Things were getting
like we built the business to be kind of a lifestyle brand. We
travel all the time. We have a lot of flexibility. In order to take
it to the next level, we knew that we'd have to sacrifice a lot on
people or more agencies, things that would mean that we need to
spend more time on it and that wasn't our goal.
Right, so to
see them be able to do that, of course, we would love it. We'd
still feel that same pride that it was ours and we built it. She
was always like this is my baby I don’t want to give it up.
It was my baby.
But you know
you kick the baby out of the house eventually.
You have a new baby. It's got seven figures.
And we are in the
process trying to buy another one.
Right. Yeah, so you guys did something smart that is interesting.
When we were; was it Blue Ribbon? Yeah, we were at Blue Ribbon
Mastermind in St. Pete and you had already; we hadn't closed on
this yet, we were still working out the details and you had already
launched another product on Amazon.
On a separate seller account you launched something new. And I
think at that point you're already up to 20 or 30 sales a day which
I think is brilliant. This business model that you're in has you be
able to build, sell, repeat, build, sell, repeat, and continue to
do it with the skillset that you have. So I think it's fantastic.
It's the exitpreneur process; you all know about the book. It's a
little plug for my book but it's brilliant. I'm so excited and
pleased for you guys. It's been a privilege, honestly, getting to
know you, spending some time with you out in Seattle. I mean, you
got to meet my son. We had lunch together with Bronson and then
getting to spend more time down in the Blue Ribbon Mastermind.
Congratulations. It was fantastic what you guys have done and I
hope that people hearing the story from both your angles and
approaches will inspire some of them to look around the room and
sell something others to have the hutzpah that you had to raise
$100,000 because you knew you had a winner; pretty incredible all
around. Any last thoughts or words of wisdom that either of you
would like to share with potential listeners, both buyers and
sellers of online businesses?
Well, Amazon is kind of
like a world where we are kind of secretive about what our product
is. Some of us won't even divulge what our category is. And it's
like that for a reason but it doesn't mean you can't have a
Mastermind, it doesn't mean you can't network with people. And that
was one of the most important things that we did. And also going to
the process that we did with IP infringement made me realize, you
know what? We’re not companies competing against each other; we
were all families, we have kids, we have a mortgage. All of us are
the same so a lot of these black hat strategies where you're kind
of doing something to get a competitive edge by sort of burning
that person; you know, really just don't do it, because, at the end
of the day, you're hurting a person who's probably just like you
married with kids, probably with a student loan or a mortgage; you
don't know. And I think we got through to the patent holder with
our issue because we made him see that and he's also a family guy;
a religious man, of course. And I think getting to know them and
seeing that we’re just another family just like him that's how we
got through to him.
And some of
his actions were when we got on the phone, we were actually able to
talk about this. I couldn't so much fault him exactly for what he
did, because we're all business people. We're all kind of doing
things to get an edge and that's what he felt. He felt he needed to
get an edge. It's almost hard to fault him for that but it was
making him realize that hey, we're not some Fortune 500 company.
We’re just like you. We’re working out of our house. We have a
family. This is our business.
And at the end of the day, he saw that because…
He did. Yeah,
so we have… Janine:
Yeah, you took care of each other as competitors and rivals and
gave each other the opportunity to continue to grow in business.
Yeah. Amazon is so big.
There’s room for everyone.
there definitely is.
Guys, I feel like I could honestly talk with you for another hour
and a half. Maybe we'll have you back on with your next incredible
exit but thank you so much for sharing your story and giving me the
opportunity to work with you.
Thank you, Joe.
Resources: Quiet Light Podcast@quietlightbrokerage.com