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In this episode I talk about the “million dollar mindset” that contributed to my success in growing my online retailer to $1mn in revenue in just over a year. I hope they help you along your way.
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Drew Sanocki: Hey everybody, welcome to the Nerd Marketing Podcast. My name is Drew Sanocki. I talk about customer analytics and e-Commerce growth but today we’re going to do a little bit of a different podcast. Slight departure for our usual deep dive into analytics. I want to get personal with you guys and I want to tell you a story about an unemployed guy living in San Francisco who’s got a roommate, not making a dime, and a little over a year later he’s got a one million dollar revenue business. That guy is me and I’d like to talk about that story, about how I grew a one million dollar revenue, e-Commerce return in a pretty short amount of time.
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Now, I started this because I was looking at the posts on my blog. Far and away, one of the more popular ones is on this subject, how I got to a million in revenue in under 18 months. I thought about that and I think, “It’s not the most valuable post, in my own opinion, but it’s the most popular post.” It’s the most popular because it holds out this promise of quick wealth or something like that. If you do the math, a one million dollar e-Commerce retailer isn’t really wealth but it’s succeeding, it’s got traction.
I thought, “It would be kind of interesting to deep dive on that topic for a couple episodes,” so I called up my old business partner, Sina. He’s going to appear on one of the next podcasts to discuss how we did it on a business level and what kind of factors went into that growth. What I’d like to do today is spend 10 minutes or so talking about the three personal factors I think contributed to that growth. On a personal level, what enabled me to build that business? Hope you find it interesting.
I think that this episode is, in many ways, more valuable than the one I’ll do with Sina. It’s because I think this personal stuff is what ultimately is going to work for you. I know it’s what worked for me. If I didn’t have this stuff squared away, then the business reasons, the fact that we found a good niche or knew how to do SEO, whatever, that wouldn’t matter. What matters is that you personally have the mindset, the approach, and the mentality to go after that kind of growth.
On the subway this morning I was thinking of three reasons, three factors, back in 2003 that really enabled me to focus on the business and grow the business. The first factor is vision. I don’t know how many of you do visioning but I was put onto it by Stephen Covey a long time ago. He talks in the seven habits of highly effective people about just writing out your mission, vision, and values in life. I’ve done the exercise since college, now I’m 44 so it’s been a long time that I’ve revisited my mission and vision values every year. The research suggests that there’s real power to writing it out. Not just daydreaming about what your life could be but actually crafting a vision in the first person about where you are, say, five years from now.
After business school I was unemployed. My company had gone under, where I was working at the time. I revisited that vision and what came through loud and clear was that I wanted to be an entrepreneur. I think my fundamental value that drives me as a person is freedom. You might have a different fundamental value, but for me it’s freedom. I want to be my own person. I want to master my own destiny. I don’t want to work for anybody else.
I think a lot of entrepreneurs are the same way. The vision that I sketched out where I’d be five years from now would be running my own business where I could essentially pay the bills and live the life I wanted, a life full of travel and friends and social activities and other things. At the core of it was independence, career independence. I took that vision, wrote it out, and I’d review it every morning. I’d get up in the morning really early. I would read the vision to myself. I’d meditate on it for a while. I had the same routine where I’d walk to the Lyon Street Steps in San Francisco and run the steps, do a little bit of workout, and on the way there and on the way home just go over in my head what that vision looked like.
I know that a lot’s been written about the law of attraction. I don’t know whether you believe it or not, but for me, this vision provided my motivation each day. It was the reason why I went to work. I went into work every morning with the mindset that I was creating independence for myself.
If you go into work every day thinking you just got to do x, y, z, or help grow the company 5%, you lose out on some motivation. For me, if you can tie it to this bigger picture, the bigger reason, then it gets you really fired up in the morning to be as effective as you can when you get into the office. For those of you who can’t do the visioning exercise or need some sort of external forcing function, I’ve heard great things about committing to a peer group or a mastermind, even to your spouse. For me, this simple visioning exercise was enough. That’s the first reason I think we were able to achieve success early on.
The second reason is focus. Unless you’ve been under a rock, you’ve read a lot about how humans are terrible multitaskers. If you are like me, you have thousands of business ideas. It’s addictive to think about them because they exist in this ideal state where you don’t have to put any time into them and you can go after any opportunity, and any one of them promises to bring immediate wealth. You got to shut that off. I found it was one of the more challenging things for me to do to shut that off and just focus on my own business, focus on one thing. We didn’t really have social media back in 2003, but social media plays the same sort of distracting role today.
I would also put consulting in there. A lot of people love the idea of doing three or four things. I’m going to be a consultant. I’m going to start a business on the side. That makes it harder to start the business on the side. You got to bring the business to the for that and focus on that. For me, that intense focus really zeroed in on one thing, and it was one number. It was $1,000. It was $1,000 a day. I wanted to average $1,000 a day in revenue over one week. That was like everything I thought about. Why did I pick that number? It was because roughly if you look at gross margin, say 30-35% or something like that, and you back into it, you come out with $100,000 of profit at the end of the year. That number, in my head, meant freedom. I knew I could survive on $100,000 a year.
Actually, it was half that because I shared it with my business partner, but I knew I could survive on 50k a year. The second I achieved that 50k a year that I was able to generate by myself, it meant the first giant step towards independence and freedom and never having to work for anybody else again. I found that incredibly motivating to the point where in the shower in the morning I was going over the number. On any dead time I had, on my commute to work I was just thinking $1,000 a day. Let’s build out the spreadsheet in our heads. What does that mean? I’ve got a $200 average order size so I need five sales a day. That’s all I need. Over time, we’re getting one sale a day from email so that means I only need to generate four sales a day. Our site traffic’s converting at a percent so four sales a day come from 400 new visits a day. I knew that organic was driving at 30%. That means I only really need to generate 250-280 new visits a day from paid traffic. That really dictated my AdWords spend, my paid ad spend.
You get the idea. You’ve got that singular focus on one thing. In my case, $1,000 a day. You back into everything else you need to do to get to that point. You think about it all the time. Once you achieve it … I think in our case it was probably three months in, four months in … you set another goal. For me that was $3,000 a day because that meant I could live a little bit better. Then it became $10,000 a day. Then it probably became selling the company or something like that. For me, that simple mental construct, $1,000 a day, and focusing entirely on that, was super important.
The hardest thing for me easily was to put all the other business ideas I had, even different directions to take my company, put them on the back burner. Now there’s a book out, The One Thing, by Gary Keller. I encourage you to write it … Sorry, I encourage you to write that book. I encourage you to read it. I would say he talks about roughly the same thing. That there is an 80/20 rule that exists all around us. That a very small proportion of your activity drives all the results, and to focus on that one thing. In my case, backing into those sales numbers, figuring how we can build a business to generate $1,000 in revenue, that was the one thing I focused one. That was factor number two.
The third factor was cultivating habits. That was very important because I think most entrepreneurs have a little bit of ADD. You may have the vision. You may have the focus, but you’re not doing the same thing every day. I was like that for the first several months of running my business before I went to Salt Lake City and I met with a guy who was my mentor at the time, John Bresee. John Bresee started a company called Backcountry, backcountry.com. He grew it, sold it to Liberty for I want to say like hundreds of millions of dollars. That was all to come, but at the time it was a super successful outdoor equipment retailer. He sat me down … I think I was looking for some kind of secret sauce, like what’s the hail mary pass here, what’s the home run that we can do that is going to fire up revenue and triple the business next month.
He said, “Drew, you know what wins in ecommerce is pressure over time.” It’s as simple as that. That stuck with me. Pressure over time. It’s blocking in tackling, to really ram my sports analogies into the ground. It’s singles and doubles. If you want me to put this in terms of any other sport, I’ll do that. Singles and doubles, blocking and tackling. It’s the basics. It’s going into the office every day and doing 1% more than you did the day prior to move the business forward. I think that to me is the beauty of ecommerce in that you don’t have to come up with Twitter. You don’t have to come up with Airbnb or some paradigm-crushing business idea that breaks everything and starts over again.
True, if you do that, it’s great. Those businesses become billion-dollar businesses, but ecommerce is basic. It’s selling something that somebody else wants to buy. People have been doing that for thousands and thousands of years, and there’s a very straightforward way to do that. Sales is sales. Marketing is marketing. Traffic is traffic. If you just focus on those basics and apply pressure over time, and improve a little bit at a time, you’re going to succeed. You can’t say that about a lot of other things. It may take longer for some of you than others, but that’s the mentality you got to have.
I think that’s the reality. The reason most of us don’t believe it is we read Fast Company and we read blogs, and on the cover of Fast Company is always somebody who’s blown the doors off of their company and grown so quickly. I think it’s important to step back and realize that they represent such a small percentage of entrepreneurship. That it’s often unrealistic to shoot for that. Not only unrealistic, probably not a good business decision to shoot for that. That by and large, the vast majority of entrepreneurs do it by blocking and tackling, by doing the basics.
At Design Public, this took the following form. To put this in context, I had just gotten out of the navy. I was in the navy for four years before business school. I had the navy mentality of building what are called standard operating procedures, or SOPs. Everything in the navy has an SOP. It has an SOP for a reason. It’s so that you can get predictable performance from your team. I needed to generate an SOP to run my business. For me it took the form of time blocking. Monday, for example, I focused on acquisition marketing, Tuesday retention marketing, Wednesday merchandising, Thursday customer service. Friday I think was growth and improvement. That was the one day a week I was allowed to think of outside the box ideas, which is extremely frustrating for me, by the way, but I had to box it into Friday.
Then within each day I had the same routine. I knew Monday morning when I went in I’d open up Google Analytics and look at my acquisition marketing dashboards. I’d look at the same dashboards every week and compare week over week. On Tuesday when we were looking at retention, I’d go into the office every day thinking email and remarketing. I’d open up my Google Analytics dashboards and look at the email marketing dashboard and looked at how our campaigns were performing and doing things like that. That was on a weekly basis, but I had SOPs for monthly and quarterly too. Every month, for example, we had an A/B testing SOP. We were always running A/B tests and running competing campaigns on the site, through email. For our business with our amount of traffic, once a month was a good pace to review those tests and improve on them.
Quarterly SOPs. Those were typically a good time to review the SOPs themselves. You go back and you look at the is this Monday through Friday thing working for me and for the company at this stage. Is the A/B testing thing working good on a monthly basis or do we need to bump that to weekly? That’s what we’d do quarterly.
I think when you have that approach, it really increases your odds of success. Everybody listening to this podcast knows you have to do conversion rate optimization. You know you have to do email. You know you have to do SEO. I find that most entrepreneurs, though, come into the office and take random shots at whatever they feel motivated to do today or inspired to do today. Like today we’re going to look at a couple A/B tests because I read a blog post about it yesterday. The entrepreneurs I see that are succeeding have developed this sort of habit of working on one or two things at a time at the same time every week, at the same time every day. I would encourage you to adopt that approach.
Abstracting up from ecommerce, I think this approach works in general in life. It’s about consistency more than it is about speed. If you read literature on productivity like James Clear’s blog, he talks a lot about carving out the time to write 500 words a day, and how you just focus on the process and not the outcome. Ultimately you’re going to achieve the outcome of a great book or something like that. I know Stephen King did the same thing. Gates did the same thing with coding. He just focused on coding a little bit every day. It’s that mentality of process first, we’re going to focus on improving this process, getting 1% better day after day, that ultimately leads to the outcome of building a successful business. There’s a good book out right now called The Compound Effect by Darren Hardy, which basically just says what I just said. People underestimate how much they can achieve when they compound effort over time.
That’s about it. Those are three pretty personal factors – visioning, focus, and habits – that I think were critical in building my business. They have nothing to do with the business themself. They would apply to building a family, building a content business, building a Saas business, whatever. I think they apply, in general, to accomplishing a lot of different goals in life. In many ways, because they are personal, because they got me to do the work, the work of building a million-dollar retailer, they are more valuable and more important, in my opinion, than a lot of the business factors.
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That’s what I want to leave you with today. I hope you enjoyed listening to this more personal version of the Nerd Marketing Podcast. Give me feedback. Shoot me an email at [email protected] Tell me what you think of this personal approach. Check out the blog, nerdmarketing.com. I’ve got some good playbooks up there. I am putting together a one-million-dollar retailer playbook which you can subscribe to on this podcast page on my blog, which will give you a good cheat sheet to all the factors that went into building the business for myself. Hope it applies to you. If you got time, review the podcast on iTunes. I really appreciate it. My name’s Drew Sanocki and I will talk to you next week.