TPP009 - Tactics to benchmark your Amazon business and avoid failure

[00:00:41] We're showing off Howie, you see you're very humble man, but you are bragging

about this. You've got the best of the best in terms of speakers coming up with, at your

actual end of the June event. The Professor's Pandemic Event is the first ever online virtual

event that you'll have, which people can attend from the comfort of their very own home.

[00:01:01] And you have combed the entire globe to meet these guys to get to know them

better. And you literally picked out diamonds in the rough. So you want to tell us a little bit

about the exciting guest that we have on today and a little bit more about your excitement

for your first ever online virtual event?

[00:01:19] So the guest that we have today is Ken Kubec. Have I said it correctly, Ken? So he

does a lot of purchasing of Amazon businesses or brands. So I really thought that his

company, what they do, stand for, is really interesting because normally when I see people

buying businesses or Amazon businesses, they don't actually know what they're doing.

[00:01:45] And a lot of them, they kind of fail. And they're actually on like a mass scale

where they’re buying businesses all left and right and they actually can't scale it. And it looks

like they have a good team to be able to, you know, bring it up to another level. Usually like

a lot of these PEs or these restaurant businesses, companies that comes in and buys it really

doesn't really do that great of a job.

[00:02:08] So this is one of these companies I see that does a fascinating job at scaling. So

that's why we brought him here and I met him in another mastermind that one time. So I

thought that he would be a great guest on our show for our mastermind, for the event, it's

going to be in the end of the month of June, I believe it's the 29th to the 30th. So let's see

how many people we can get in and everyone to see how much knowledge that we can

show everyone.

[00:02:41] Absolutely, and I just want to remind people again, Howard said it's at the end of

June, the 29th and 30th and I'll give you guys details on how you can actually sign up for the

event. And also wanted to just remind you, I've actually been to approximately six of

Howard's events, and I will say this, I've learned so much and executed so much of what I've

actually learned there, that it's actually created a valuable Amazon business for me.

[00:03:05] Made friendships that I can only imagine are going to last a lifetime. And the

knowledge that I've taken there has taken me to a whole other level and I'm thankful for

that. But typically at the actual live events, they cost as much as $12,000 per piece. I'm lucky

I get to emcee them Howie, so that to me is

[00:03:26] The most awesome thing in the world. But I am especially excited for this one

because for the first time ever, as I said, you can attend it live from your house. You can be

in your pajamas just like I am right this moment, and you can be doing whatever it is that

you want to do while you listen to the best of the best, drop their knowledge bombs on you

left and right.

[00:03:45] And you also get to interact with these guys and ask them questions. So I am

super stoked for that. I'll be emceeing it live from my pajamas as I'm pretty sure people like

Ken will be also. Making presentations live from their pajamas. So without further ado, let's

meet this man Ken who has a very interesting strategy on Amazon.

[00:04:04] As Howard said, he buys Amazon businesses with the intentions of making them

better, and we'll find out more about his end goals as well as a lot of other great things. So

Ken, I've heard a lot about you already from Howard. But what we usually like to do with our

guests is we like to tell them, let's just pretend you're on an elevator with Howard, and

obviously, you know, he is the man, the myth, the legend, featured in Wall Street Journal

and Buzzfeed news and all sorts of crazy publications for all the things that he does on

Amazon.

[00:04:34] And you're pitching him that you are the man and that you want to speak at his

pandemic event. Give me your two minute elevator pitch on who Ken Kubec is and why you

are the man. Yeah. So Liz, I wish I had a high person like you to answer all of my calls. So

yeah, I've spent, before Amazon, I spent 13 years in investment management and investing

hundreds of millions of dollars in public companies.

[00:05:04] So, you know, investing is near and dear to my heart, analyzing businesses. I

joined Thrasio 18 months ago as the eighth employee. Since then I've analyzed over 500

Amazon businesses and purchased over 50. So I think when it comes to selling your Amazon

business, I've seen it all. I've heard it all. I probably looked at at your business at one point or

another.

[00:05:29] And you know, we're just, we're building a great operating platform and at this,

at the rate we're at now, we're acquiring five to 10 Amazon businesses a month. Wow. So

what do you consider yourself the most foremost expert in regarding on this, in your

business? Yeah, definitely. So, valuing Amazon businesses, right?

[00:05:51] I mean, we've seen, we've, we've purchased businesses that are steady. We’ve

purchased businesses that are growing over 150%. We've also looked at businesses that

were struggling and needed a capital infusion to turn it around. So I think in terms of looking

at a business, benchmarking your Amazon business versus other successful sellers, is, is

something.

[00:06:12] And we do it internally when we look and make an assessment on business. So

again, I've looked at over 500 profit loss statements, revenue trends, and new product

launch trends and to talk to a consultant. When we have these initial conversations with

sellers, we really talk through what's been successful, what hasn't worked, you know, I know

all the software that all use.

[00:06:36] So you talk about having the masterminds of the greatest sellers like we only look

at businesses that are doing over a million a year in revenue. So it was kind of the top five

1% of Amazon sellers. And I get basically an inside look and how they run their business and

the successful strategies as well.

[00:06:56] So let's say that you, you know, there's a lot of other companies out there that

buys companies and tries to do the same business model as YouTube grow them. And what,

what do you, what, what, how is it different from what you, what you do and do you see

there, what they are. In general, like how, how are you different than them?

[00:07:16] Yeah. Look. Hands down, our operational team. We have over 250 people at our

company now in the US we have, Boston, New York, Houston. We have an office in Manila

and Pakistan as well. So, you know, the way we're structured is we basically looked at, okay,

what is it? What does it take to be successful as entrepreneur

[00:07:41] in Amazon. Right? I mean, it's everything from negotiating with suppliers to

managing your cashflow, to writing creative content to photography and videos, to driving

traffic on Amazon sponsored ads or other ad formats within Amazon's ecosystem, driving

traffic off of Amazon to Amazon. So we've actually built our entire company around.

[00:08:07] Operating and scaling Amazon's brands, which means, so we have functional

expertise in our supply, our supply chain or how our supply chain ran a $2 billion sourcing P

and L, Maersk, which is the largest global shippers. So we kind of looked and you know,

every entrepreneur has that, every human being has deficiencies, right?

[00:08:30] Particularly when it comes to business. I have blind spots. Things I'm not really

good at, and there's things that I'm really good at. So every entrepreneur has that same

skillset, you know, strengths and weaknesses. What we've done is, we've crafted this

platform that plays to all the strengths required and at the highest level, right?

[00:08:51] So we're talking earlier, right? Like Amazon SEO, like some people are probably

good at it and they know how to rank. but have Casey Gauss, the founder of our launch now

running Amazon SEO for all of our brands. So when you line all that, there's a lot of

efficiencies to be gained. And then also, when you think about, you know, just the ever

changing landscape of Amazon and how you're successful and the steps required because

we have an entire platform.

[00:09:24] Once we figure out how we should be doing this, we can roll that out across our

50 plus brands, basically in an instant and achieve that efficiency game versus, you know,

one seller that you have somebody managing a few brands when they bought a few brands.

They're constantly putting up flyers and we've just really institutionalized the entire process.

[00:09:45] We have probably five or six in-house attorneys that are just strictly focused on,

Oh, there's a bunch of a few of them that are strictly focused just on IP and the pending IP,

et cetera. So yeah, I think that's, you know, our entire company is built around running

Amazon. I think that's where we differentiate.

[00:10:04] And then just the scale and what we've learned. It's not easy. So Howard, you

mentioned people just want to think it's, you know, it's a path to riches and it's a four-hour

work week. And I always laugh when I hear people say, Oh, I spend five hours running my

Amazon business. Yeah, it took you three years of sleepless nights and spending 40, 50 hours

a week to get to that point.

[00:10:28] And so anyone that's thinking of buying an Amazon business, you know, and they

don't have that experience, don't oftentimes realize that it's a full time job and it requires

immense detail and perseverance. You know what Ken, you've got a very unique actual

perspective on the whole Amazon thing, and like you said, you're not the one that actually

runs the SEO or does the ranking and strategy, which is kind of what a lot of our actual

speakers so far are experts in.

[00:10:58] But like I said, you provide a really unique perspective that nobody else has thus

far in all the interviews that I've had, Howie have done. And so I think with that being said,

you're going to be able to provide a really unique perspective in what you actually talk

about. So give me an idea of the three to five topics that you think you could talk about

during this event that would absolutely wow people and.

[00:11:21] Make them like really raise their eyebrow and learn something that they never

heard of before. Definitely, a talk about benchmarking your business so as you, as you move

down a P and L, what your business should look like, what your margin profile should look

like, what's attractive to sellers, what's attractive to buyers of Amazon?

[00:11:41] You know, obviously if you're thinking about selling. How to think about

valuation, how to get your business ready for sale, right? I think there's a misconception of

you got to spend three to six months getting your profit loss statement in order. And there's

all these, you know, it's, it seems like a very daunting task to get your business ready for

sale.

[00:12:00] I would tell you that it's, it's not daunting, but it can be done. You know, we can

assess things in a few days without heavy lift from this, the seller, the sellers in advance of

that, and then also look at what we're, what we're seeing across the Amazon marketplace.

So, you know, we're basically a mini Amazon ourselves, right?

[00:12:19] Kind of a mutual fund grants we acquire across numerous categories. Solely, you

know, just acquiring an old kitchen or sports and outdoors or auto work. We're across the

board, so across $51 million plus brands, we get to see a lot. We know what's working,

what's not working. There's a lot of knowledge, you know, I'm definitely going to talk a lot

with our team internally and figure out the nuggets and value that we can add to the

attendees.

[00:12:51] Absolutely. I gotta be honest with you, everything that you said there, I'm excited

to hear what you have to say about it because as someone that you said, you've looked at

over a hundred P and L statements, and I don't know if you said that was just

[00:13:07] 500, was a hundred a month, so I was already, well, totally didn't even hear the

rest of it. With that being said, what are the biggest actual mistakes you see that people

make when they're actually looking to sell? Yeah. So I think the biggest is timing. And this is

something that I think a lot of people don't talk about when they actually discuss scaling

Amazon businesses.

[00:13:32] So, you know, I always encourage sellers when I talk to them like, know what

your ceiling is on your existing brands and products. And you know, you might've watched a

product that's in a super small niche, and maybe you actually, it's, there's a physical

limitation of growing it to a million dollars right.

[00:13:52] So don't sit there and think you're going to get us to 2 million. You have to look at

your existing product set and calculate how big can this get? The leader has 30,000 reviews

and the second place has 20,000 and you're just starting out. Look, you're not going to get to

a top five market share in that niche.

[00:14:11] So you don't have realistic expectations. And then I say, you know, it's like having

planning to have kids or getting married. There's no perfect time, but you know, what's the

best time for you in the moment? And I always tell people that you got to focus on, it’s often

the best time to sell is when things feel really great, right?

[00:14:34] Because you don't want, you don't want to run the risk of the business plan

towing. And then starting to decelerate, and then you're selling from a position of weakness.

So you know when your sequential monthly growth rates are increasing, that's often the

best time to sell because the buyer wants to also look and know that they're purchasing

future upside, right?

[00:14:58] And then there's things that they can do to prove revenue growth or the

profitability profile of the business if everything is completely optimized. And you know,

you've scaled at the 5 million and then you just been running at that level, you know you're

going to get more value. If you're selling it for a million and the seller knows they can grow

at 25 30% expand margin.

[00:15:21] So, you know, it's timing is it's tough to actually predict and second you just want

to do what's right for you and really try and maximize your value. How many did you say, I

forget, how many companies or brands do you own right now? Over 50. Yeah, it'd be double

that by the end of this year. So within that 50 what is the GMV on the total scale?

[00:15:50] The sales? So we'll, we'll, we'll be over, say we'll be over 250 million. Oh yeah,

this quarter, 250 million. That's a lot. So I also wanted to ask you, what kind of problems do

you see Amazon sellers having right now in this 2020 pandemic times now.

[00:16:15] Yeah, I mean, look, inventory, cashflow management, and you had started with

the supply chain issues in China, the Chinese new year, and then rolled into the foreign

center, issues here in the US which are still lingering. Right. So I think that that's been the

biggest issue.

[00:16:40] People had stockouts and now you have a situation where you're starting to plan

for prime day.

[00:16:51] So I think, honestly, the biggest issue people have is how they're managing for

this year’s pulled forward demand that's happened on the Amazon marketplaces and really

trying to figure out, is this the new normal? What is the new normal? We have brands and

what we've looked at brands that are up, you know, three, four or 500% year on year,

beginning of the March period where you're trying to figure out.

[00:17:20] Hey, should I be planning for this to continue for the next six months? The next

12 months is this, you know, did, did we just shift forward three years market share for

Amazon e-commerce from physical brick and mortar? So I think the unknowns are so great

right now, and if you don't have, you know, the capital or just the experience to figure out

what's, what's real, what's not.

[00:17:50] I think that's, that's a big struggle that sellers are having. I think there's

opportunity, right? It's conversely, if you're in a category that's been hit such as auto,

nobody's driving so people aren't investing in their cars. I mean, I think that's actually

category that comes out. We bounced strongly out of this as exiting a recession or in a

recession.

[00:18:17] People hold on the cars for long. They actually do invest in their cars. We saw

that in the US after 2009, 2007 especially, there was a much longer used car cycle. So you

have to think through that. And then, you know, just navigating the short term. You know,

kind of uncertainty is obviously the biggest issue, but then there's also a lot of opportunity,

right?

[00:18:40] We're aggressively advertising and trying to take share because we have capital

and the ability to invest in our brands right now and get higher ranks and try and drive the

Amazon flywheel for a lot of our products and back when fulfillment normalizes. And you

know, Ken, going off of that, I know that you mentioned that there was obviously a lot of

problems.

[00:19:09] But yet a lot of opportunity. What particular actual niches do you see that there's

a ton of opportunity if you're either already selling in them to scale or if you're brand new

and you want to get started? I think you have to study the market, study

[00:19:30] yourself and human behavior right. Are people starting new hobbies? You know, I

haven't had arts and crafts, a perfect example,right? We've seen great demand from a few

products and brands that we have in that space. So things at home for the kids is this, you

know, I feel like this is going to be a great.

[00:19:49] Roll back summer for a lot of people where it's, you know, everything is over

structured for kids now and now kids are going to be, you have to figure out what to do to

play around the neighborhood and things like that. So what opportunities are there in that?

And there's oftentimes, you know, it's, it's the second order effects of things.

[00:20:08] That you really, the longer that we're in this kind of, you know, at home, et

cetera, behavior starts to change, right? Like commercial office space. What's that look like

at home? Everybody's breaking the phone. Everybody's got two monitors at home, standing

desk, screens, microphones, all that stuff's going to continue to increase.

[00:20:33] So I think you really got to study the macro environment and really do some

research, read a lot, figure out how this is going to change society, and you know, kind of

skate to where the puck is going, not where it's at right now. You know, outdoor furniture

people, right? You could have a huge thing where people start to figure, you know,

[00:21:00] this is going to be a roll or maybe this is a rolling thing where people have to live

in their homes for 90 days on end and you know, they really start to invest more in their

homes and, Hey, maybe I need to refresh this or.

[00:21:14] Redo this, let's invest in their backyard versus going away on a vacation for two

weeks every year. I think there's tons of opportunity that's coming out of this. And then if

you're, you know, unfortunately if you're in an unfortunate position where your products

and categories are ones that are hardest, you know, if you, if you have the capital and the

fortitude, I think it's going to be a great opportunity to take market share because a lot of

sellers on Amazon are in for the quick hit, kind of come and go pretty quickly and feed that

staying power.

[00:21:46] There's gonna be an opportunity to gain a lot of market share. As your

competitors fall off stock and don't feel like replacing the POS because the volume is not

there. So I know a lot of audience here would probably like are interested in like creating

businesses on Amazon because you know a lot of, we've got a high unemployment rate right

now, so we want to, I'm sure a lot of them are thinking about selling online or doing some

kind of online business as well as we know, like.

[00:22:19] They're getting used to. I'm staying at home right now, having this more of a

more freedom and stuff. And as well as more buyers are buying from Amazon, like bill, like

we were talking about, I think I read somewhere that Amazon, Jeff Bezos like going to be the

first trillionaire or something like that.

[00:22:37] So, so like for the pandemic, he made like four or $500 million off of this. So

there's a lot of the Amazon or the eCommerce is growing so. For those people out there that

are interested, what, what, how would you suggest them to structure their business or

structure how they operate in order for a kind of like to sell or could sell so that they don't

have to backtrack. The biggest thing is by

[00:23:09] keeping it as a separate, not co-mingling it, right. Like set up in a, you know. The

easiest is to set, set up US-based LLC that often times, you know, the biggest buyer pool is in

the U S so deals typically are structured as asset purchases. So we kind of buy everything out

of the LLC for that brand. So we're not, we don't buy the LLC or the company.

[00:23:35] We actually just purchased all the assets out of that company. So you set up a US-

based LLC. If you can just run it, run it as a business, so have it, have a separate credit card

statement, have a second separate banking account. Really, don't co-mingle the financials. If

you, if you, if you run multiple businesses, you know.

[00:23:56] So list it in Amazon for separate accounts, if they're different categories, et

cetera. Kind of just try and keep it really tight, really clean so that that handover and the

ability to make sense of the numbers and all the expenses in the business are easy for the

buyer. That's, I mean, just keep it simple.

[00:24:19] Run as, you know, as a business. Keep, keep the end in mind if you don't want to.

So I think there's people that don't want to sell me the lifestyle business, right? They're

happy with the cash flows that was throwing off. But oftentimes you start to actually peel

back the onion and you know, people will say, Oh, my business made $500,000 in profit last

year on paper.

[00:24:39] And then I'm like, well, how much did you actually pay yourself and take out of

the business? And they're like, Oh, maybe like 50,000 because they're continually investing

in inventory and working capital to scale the brand. So I think it's just knowing what your

end is and then kind of working back to the beginning and just setting yourself up for that

potential exit.

[00:25:05] Great. So, any last words to our audience before we wrap it up? I'm, look, I'm

excited to hear all the other speakers as well in the mastermind, and I think there's no better

time to be a seller on Amazon either if you're, if you're just starting out or

[00:25:25] the ones you know that I've seen come across our desk are the ones that treat it

like a real business and not get rich quick scheme. So I can just attest that the psyche, you

know, the people that treat it as a business are the ones that are oftentimes the most

successful. Amazing. Thanks so much Ken, and I just have to say, like I said, you were the

most unique interview we've had thus far because of your unique skillset and pretty much I

think everybody that's listening would agree with me.

[00:25:55] You can speak about whatever you want. We are ready to listen, so thanks so

much for joining us. And Howie, how excited are you about Ken's speech at the event at the

end of June? I'm still deciding which topic we should have him talk about because it's so big,

so much things that he can really teach us about his business.

[00:26:16] Absolutely. I'm thinking we just let him go with it. Come up with whatever he

wants, because pretty much every single thing that he said is pretty much on my list that I'd

like to hear about. So it's almost a let him pick, let him decide whatever it is he wants to.

unleash on, on us and on the crowd that joins us.

[00:26:34] So I'm super stoked. I know Howie is too. Any last words from you Howie, before I

let people know the details and how to actually attend? There's always a man of few words,

but as I said before, he is the man, the myth, the legend when it comes to talking about

Amazon. He will go on for hours and hours and hours.

[00:26:54] His wife can attest to that, but when it comes to anything else. He's a man of few

words. However, he will be a man of many words at the end of June on June 29th and 30th

at the first ever online Professor's Pandemic Event. And I just want to remind you before we

say goodbye here, typically this was held live and it's a $12,000 per person event. But this

one time only, we are going to make it very affordable for everybody that either has.

[00:27:21] Already an existing Amazon brand that is crushing it or people that are just

getting started. The Professor has decided that he wants to expand the people that actually

listen to them and expand his level of knowledge as well as every single person who is

speaking of global knowledge to everybody that attends.

[00:27:39] So if you want to attend, go to a9mastermind.com/ppe to get more information.

And other than that, I want to thank everybody for joining us on this episode, and I

personally, and I know Howie does too, look forward to hearing Ken’s speech as well as one

of the other 15 speakers. Again, who knows how much the combined earnings a year are of

these speakers at the last Mexico mastermind.

[00:28:03] Right. The combined yearly earnings was over half a billion dollars. I think Ken

alone is going to take that almost even to the billion dollar mark. What do you think that

could be? Good could happen? Because last time I think it was like I talked about before, we

had like a six hundred fifty thousand, six hundred and fifty million dollar a speaker that was

speaking at our event.

[00:28:24] So just that one person. I bet you on that crowd, that one, that one mastermind

event there was.

[00:28:36] Yeah, that's just a, that's just pretty much every day for the Professor’s. So again,

I look forward to seeing you all at the event, June 29th and 30th to find out more

information, go to a9mastermind.com/ppe and thanks again for joining us. We'll see you

later. Welcome to the Professor’s Podcast where we discuss the best strategies to massively

improve the reach and bottom line of your business

[00:28:59] In the current virtual and economic landscape. Your host, Howard Thai, generates

over $5 billion for his clients annually using innovative tactics, both on and off Amazon.