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Built Online
How He Went from $0 to $10M in Just 3 Years with His Own Store | ft. Adam Callinan
00:38:06
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- [00:00]
A
First time operators and even second and third time operators have a tendency to underprice your products when you come out because you charge what you think is fair and it's an emotional thing and you have to do that. You have to kind of like draw a line in the sand. But then you have to test that product out because two years later we were selling that exact same product with like some tweaks to it for double that for $39.99. So that's massively expanded our margin. And yeah, for the first couple of years we were easily operating at a probably a 35% net margin.
- [00:24]
B
Hey there. I'm Cody McGuffey. I'm a husband, dad of three, and the founder of Ever Be, Ever Be, Ever Be Everbee, where we serve over a million creators across the globe, helping them grow thriving online businesses. I believe every single human is a creator and I believe every single creator should own a business. It isn't. It gives them the freedom to build the life that they dream of. Built online is where creators, entrepreneurs and leaders get real insights, real stories and the edge to build something that actually lasts. This is where the next generation of builders get built. Adam. What's up man? How are you?
- [01:00]
A
Hey, Cody. Doing good, how you doing?
- [01:02]
B
Great. Happy you're here, man. Thanks for coming on. I'm excited about our conversation.
- [01:06]
A
Yeah, likewise.
- [01:07]
B
Yeah, we were already talking before, before we hit record and I, I had to kind of stop us because we were already getting into, into the good stuff. But for anyone that doesn't know who you are, who's Adam?
- [01:19]
A
I am number one, a dad and a husband. And I am very, very crystal clear on that from a priority standpoint. I have been for a long time. That's actually if you can see the sign behind me, if you' video how I ended up in Montana. I've always been an entrepreneur, so I've always sort of been in doing my own things. I have worked for other people a lot and I don't know, I like the struggle and the pain and the glass that we get to chew on all the time.
- [01:43]
B
I love that. How many kids do you have?
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A
Two kids, son and a daughter. Four and six.
- [01:47]
B
Four and six. Cool. I have three kids. I have a six year old boy, a four year old girl and an eight month old boy.
- [01:52]
A
Epic.
- [01:53]
B
Yeah. How long have you been married?
- [01:55]
A
15. I know I should just know the answer to that. 14 years. I mean, my wife and I met in college at this magical place called Dirt Bags.
- [02:03]
B
Dirt Bags. Interesting. Nice shoot. She picked a Winner, huh?
- [02:07]
A
Yeah. Yeah, I did the picking. I got lucky on that transaction for sure.
- [02:13]
B
Very cool. Also, I might have been married for about. Not. Not about, actually. We just hit her 10 year and we were together since high school.
- [02:21]
A
Nice.
- [02:22]
B
Yeah, very cool, man. I. I totally can relate to building a business, building a family, and then building a business at the same time. The challenges with that, a lot of people listening to this can certainly relate to that. I think the majority of people that listen to this are aspiring entrepreneurs or they're growing their business right now as we speak, and they're always trying to walk that line of being a great wife, mother, husband, father, while also, like, leaning all the way into their business, too, and making sure that they're optimizing for their. Their. Their goals as well. And so we could. We could definitely talk a lot about that as well, I'm sure.
- [02:57]
A
Yeah, I mean, there's a. I've done both. Right. I mean, my last company, I'm sure we'll get into Bottle Keeper. I built that when I didn't have kids. And, you know, we were at the time living in Manhattan beach, and we had tons of flexibility. And I had sold out of a company before that, which was not an insane win. It was, you know, not work for a year or so when. Which is awesome. To be clear. I don't want to say that that's nothing. It was definitely something. But my wife did really well, and we had tons of flexibility and timing, so we built that company, traveled the world. It was built on the Internet. So, you know, we can definitely talk through a lot of that stuff. But now building Pentane, I do have kids. It's an entirely, you know, we sold that company, which was a much better out, bigger outcome. But it doesn't change the fact that, you know, your. Your time is your time and where you decide to. To spend it.
- [03:42]
B
Which company did you sell? You saw Bottle Keeper and what other companies?
- [03:45]
A
Yeah, the one before that. I sold my position in a medical tech company called Ann M M. Okay, very cool.
- [03:51]
B
Awesome. Perfect, man. So I want to talk about maybe the history first, and then we can kind of jump into what you're doing. We could spend a short period of time talking about what you did. So what was your first couple companies that you built? And it sounds like they were all online for the most part.
- [04:06]
A
Yeah, that was a learning curve. The first company that I went into that I did not build, I went into right out of college was an orthopedic device company in Phoenix, Arizona. It was small they were operating out of a tiny apartment. It was only a couple of people. And I basically. And I took a huge risk to do that. It was no, it was like I was working on a draw, 100% commission based. I turned down a job, a couple of jobs at bigger medical companies with benefits and solid salaries and everything. And I just am good with risk. I always have been. So I got put in charge of building that company in Phoenix, doing all the sales, then build a downline. And then I expanded that company to Santa Monica, Southern California in 2008. And that company got big and heavy. And I did not realize how hard it was to operate until we spun off a tech piece of that, you know, the, the medical device company had. I don't remember exactly how many, probably 80 people in multiple states with warehouses and delivery vehicles and tons of stuff. And this tech piece which dealt with insurance reimbursement in the first year and a half. It was like eight people in cubicles executing documents. And it was bigger than the medical device company from a revenue standpoint. It was like, oh, wow, that clearly could be done a lot better.
- [05:21]
B
Very cool. Okay. And then there's Bottle Keeper.
- [05:24]
A
And then sold out of that. It was right about that. Tim Ferriss for our workweek time period. And I was trying to figure out what the next thing was. My cousin had invented this product. Uh, I literally have our prototype one of em right here. So if you're watching video, you can see this. It's like a stainless steel bottle. We, my cousin Matt Vice gripped it to a table and hacksawed it in half. And then super glued a bunch of koozie material in there. And so it made this like stainless steel beer bottle protector thing. Cause he was maniacal about drinking a Corona on the beach at a specific temperature. He was on the beach drinking out of a red party cup or a red solo cup or whatever. It was like 80 degrees in minutes and made it. So he invented that. I was doing that. I literally started like a wine app. I was trying to launch a venture fund, which is the worst idea ever. For me, at least for me. And so Matt pulled me into that over time. But I was really adamant that we build it lean and make sure that it wasn't just our aunts and uncles and moms and dads that were telling us it was great that we had buy in from people we didn't know. And buy in literally meant swiped credit cards and money.
- [06:32]
B
And the revenue. What, what do you. I think I documented it here, but I want to Hear it kind of from you. How big was that? And it went from a revenue standpoint, if that's, if that's public, of course.
- [06:41]
A
Yeah, we went from. So that was. We launched, we started the company in 2013. We shipped our first product in 2014. We did probably 130 or 50,000 in sales, all of which was in the last three months of the year. And that was. There was a big inflection point in there, which was a lucky timing thing that we can talk about if you want to. In the second year we did. So 2015, we did roughly 1.8 million. In 2016, we did 8 million in sales. And we had no employees, no investors. My wife and I were out of the country for four months of the year, traveling. It was, it was epic.
- [07:14]
B
And you sounds like you were profitable if you didn't have any investors. So like.
- [07:17]
A
Oh yeah, we were. We were profitable from day one.
- [07:19]
B
What was the profit margin on that? Something like that. Because, because you guys invented that product. It wasn't like, I know traditional E commerce is like shooting for 30% would be ideal net profit. Is that kind of the same thing for a product that you actually invented yourself?
- [07:31]
A
Yeah, our gross margins on that product when we made it, they were like 90%, which is insane for a consumer product. And. But it grew to be that it wasn't right at the beginning because we launched the product at a $20 price point, which is a huge lesson. First time operators and even second and third time operators have a tendency to underprice your products when you come out because you charge what you think is fair and it's an emotional thing. And you have to do that. You have to kind of like draw a line in the sand. But then you have to test that product out because two years later, we were selling that exact same product with like some tweaks to it for double that for 39.99.
- [08:02]
B
Interesting.
- [08:03]
A
So that's massively expanded our, our margin. And yeah, for the first couple of years, we were easily operating at a probably 35% net margin.
- [08:11]
B
That's a dream come true for a physical product business. Right? Like, that's, that's solid. Especially considering, like your traffic was mostly coming from. Was it paid? Paid media?
- [08:19]
A
Yeah, that was, that was that big inflection point. In August 2014, right in, right in there, Facebook launched their video ad platform. And that's what changed everything for us. Cause you had to see this product in action. Like again, if you just see this, it just looks like a water bottle. You don't see that there's a beer bottle sticking out of the top of it. So we had to have hands come in, like, physically moving the product. So. Which I did all of that. I mean, again, we had no team, so I was shooting all the videos, making all the content, and doing all the paid ads.
- [08:46]
B
Wow. And you guys were. Obviously, this was a standalone store. Didn't come through. You said in Facebook ads, that means you weren't selling primarily on Amazon. Uh, like, you guys were all Santa Lu.
- [08:56]
A
It was, it was completely direct to consumer on our own website. That was very, very intentional. We did not want to go on Amazon. We eventually had to go on Amazon, but that was because of patent issues and intellectual property stuff years, years later.
- [09:08]
B
Okay. Very, very cool. Congratulations on that, on that success too, for you and your cousin. That's. That's no easy feat. And a lot of people watching this right now are inspired by that story right there. What made you want to sell that, that business?
- [09:21]
A
Fast forward. So that was 2016. We grew bigger than that into tens of millions. Hired a couple of people. That, that last year, that 2016, we would do half our revenue in the last 6 weeks of the year. So in like November 20 to December 20, we did $4 million in revenue. And I had no employees, no team members, which. Which was insane. I mean, my hair was on fire. We were the. We were barely hanging on.
- [09:48]
B
So we're hanging on, like, mostly just bandwidth wise or is it inventory wise or cash wise? What was it? What we.
- [09:55]
A
A hundred percent bandwidth. I automated. I built systems to automate as much as could at that time be automated. But there was. So, for example, in customer Service, the same 10 questions get asked 98% of the time, like, where's my tracking number? I want to change colors. I want to, you know, I can't find my order. Like, whatever. You can automate those things, especially. This is pre AI, right? I mean, this is just automating it with conditional logic and zapier and whatever. But the, the 2 or 3% of questions that are nuanced, you have to actually deal with. And so I was actually dealing with those questions. And our product at that point was a $40 price point product. We did $4 million in a month. That's a lot of $40 products. So we were shipping, you know, 2,000 orders a day. And if, if 2% of those company, you know, support tickets have a problem, that three support tickets a day becomes a hundred support tickets a day.
- [10:50]
B
And how are you guys fulfilling these things? Was it Was it in your. In your garage? Did you have a warehouse? You have a 3PL? What was it?
- [10:56]
A
We started in a 3PL, which was a disaster because we were small and stuff vanished out the back door. It literally almost sunk the company, like, in its first two weeks of operations. Then we took it in house, and my cousin did it. Matt in Phoenix, out of a warehouse he had for a different business. We literally, like, had my retired dad coming in part time to pack orders. And. And for that Christmas, like, I flew out there, my wife flew out there to Phoenix, and we just had a family order packing party at the warehouse. Just crushing orders out the door.
- [11:22]
B
Yeah, we've totally done that. My wife and I. My. My nephew's packing orders, my sister's sewing products, my mom doing it. Like a very, very cool. Looking back on it. I don't want to do it again.
- [11:36]
A
Yeah, I know.
- [11:37]
B
Very cool experience that you got to have there. That's so cool. Really special experience that no one can take away.
- [11:44]
A
Totally, totally.
- [11:46]
B
And now I understand more why you sold that business, because you don't want to do that forever.
- [11:49]
A
Yeah. And so the long answer to your short question is then it got bigger. It got to the point, you know, to be very honest, where I was spending more time dealing with legal things. I'm like, patent infringement issues, because we had a. By the time we got acquired, we had 42 patents, so we had a huge patent portfolio. But that also means you have to defend the patent portfolio. So I was spending all my time doing that stuff and not creating and being creative and making and building. And Matt was in the same position. We didn't build that company to be a legacy company. We built it. The intent was to build it, to build a healthy, scalable business. Knowing that it was both. If it was both healthy and scalable and you had other points of value and that chain, someone would always want to buy it.
- [12:30]
B
Really cool.
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A
And that's. That's what happened. At some point, we just started listening to the people coming say they wanted to buy it and went down that path in 2021.
- [12:39]
B
Really beautiful, man. Congratulations. Okay, cool. So now it brings you to. To today. What are you working on now?
- [12:47]
A
So if we. If we fast forward, then I was. The acquisition closed in March of 2021. We got acquired by a private equity group that had just purchased Arctic Outdoors rtic, which they. It's a cooler drinkware company. They historically sort of drafted yeti. That was their business model, Windpoint, which was the private equity firm that bought them. They implanted new leadership who was epic. The CEO they put in name was Bill Pond. He was amazing. I learned a ton from him in a very short period of time. I stayed on to oversee the transition through 2021, 2022. I took time off not because I didn't get to see my kids before my life was built around the kids. The work was something that I, that I did that was always ancillary to that. Um, but because I had a performance coach who told me not to just go start another company just because you like, itch and twitch. And of course then I did exactly what he told me not to do, and it was a disaster. And then I said, okay, Jeff, I'll sit still. I got into carpentry and building and doing things with my hands. That is now a huge part of my life. And after a while, I. I got up one day and I realized probably six or eight months into into that I woke up and realized that my most difficult decision to make the entire day was what to have for breakfast. I mean, that's like a true thing. Like, I literally remember saying, like my hardest decision, the most brain power I'm going to put into anything today is what to have for breakfast. And that's a problem. So Dr. Jeff said, great, you're let's ready, let's go. You would call it soft offense. Let's just go push on something like, go. We'd invested in a bunch of companies over that time period, 13 or 14 companies. He said, let go talk to a couple of them and just ask if you can help. Like, just go look inside. And I did that and realized that they had a hard time understanding how to make money. You know, net profit at the end of the year, it is your revenue minus your expenses. That is absolutely true. But if you understand the nuance of what. Where the revenue comes from and how it's built and where the expenses come from and how they're built. There's all these things you can do to manipulate that information to change that net profit number without ne, without working harder, without having to ship more product. And that's something we did really, really well at. Bottle Keeper, that's. That was a huge part of our outcome, is that I was running all the paid media up to 8 million in revenue. I mean, we were spending. I was personally spending millions of dollars a year on paid media while also sitting in the seat of CEO. So I was looking at those challenges from the standpoint of the operator of the business. And I needed information that I couldn't Have. So I built systems and my cousin Matt helped. We did this together. We built all these systems using a ton of math. We're both really good at math. We have crazy science degrees. And those systems are what we operated that company on from start to finish. We tried to replace it, we tried to find software versions of it and we, it never worked. We always went back to these crazy spreadsheets. So I, I rebuilt those systems, parts of those systems in a much sexier way into these companies. And it that I was now like just sort of free advising. And it totally changed their businesses. I mean one of them, one of them increased their net profit by 50% in a year. And they didn't increase their top line, they increased their top line by like 6%, some small amount. But they, it just, it answered all these questions around how to better use ad budget and how did you know there's, there's a difference between a fixed expense and a variable expense, which is to say a payroll expense versus a marketing expense or a cost of goods expense or a shipping and fulfillment expense. Like how those things live and exist in your business impact your net profit differently.
- [16:23]
B
I love that. And so that brings you to current company.
- [16:26]
A
Yeah. So I did that again in a, with a consumer product company, E Comm, that was losing $100,000 a month. Couple life, months of life left, did the same thing and I got paid. That was the next step was like, okay, you have this thing now go get somebody to pay you money for it. So I got paid as an advisor a lot to go in and help turn this company around. And I rebuilt these systems again. And you know, month one, when I got there they lost 100 grand. Two months later they made 50 grand. Now two years later they're, they went from a $2 million a year business, now they're a seven and a half million dollars business, profitable and crushing operating on this system. So Pentain is the result of that experience.
- [17:03]
B
Beautiful Pentane. And I'm on the site here too. Really, really cool concept. And basically you're saying that it's the co pilot for your Lean E Commerce team. What does that mean? Like what does that mean for someone that doesn't even understand? What does Lean E Commerce team even mean? Like I already feel like I'm lean. I'm already two people. Yeah, one or two people. So what am I missing here? What do I need that?
- [17:25]
A
Yeah, I mean what it means is that we clearly need to do a better job with our headlines on our website. And that's Something that will, you know, you like test forever. What I mean, what pentane is. You know, we were talking about this before we hit record. There's like two sides to a business and it really is like the expensive side and the revenue side, right? And you have tons of marketing technology or martech and you have tons of financial technology or fintech you don't have. There isn't anything that takes those two things and blends them together. And the reality is that's where all the like special sauce is. You can't properly define an ad budget or understand how that ad budget has to perform if you don't understand how the company spends money. It's like from a margin standpoint, if you're on a, if you have a 50% gross margin, what you can afford to acquire a customer is way different than if you're operating on an 80% gross margin or a 35% gross margin. But, but as an early stage business, which is what that Lean E Commerce team is supposed to be very specific to, as an early stage business, you don't generally have like, you know, unless you have a finance background, like, you don't generally have a good hold on what finance even is. And so the, the copilot part to that is we will solve all of that. You literally like connect all your things and we will tell it's not just give you data. That's what all the other people do. And I don't care about that. We don't just say like, here's a dashboard, figure it out. Here's some data, figure it out. Here's some instruction figured out. We literally, we take that and we tell you what to do. We say you want to get, to break even, you need to increase Your prices by 7.2%. You need to increase your conversion rate from 90.92 to 1.04. You need to increase your ad budget to $7,400 a month at a 3.2 return on ad spend and then give you all the tools to be able to go and dynamically change them. Because if you hire somebody, that all that changes, right? If you spend more on ad spend, that needed return on ad spend actually comes down. But how much? What happens if you do a sale? What happens if you increase prices? What happens if you get a 30% tariff? Like give you all the tools to be able to answer those questions.
- [19:26]
B
And those are the things that in my, my experience you have to figure out on your own and you have to use a spreadsheet. You have to like ask. You have to actually be asking yourself these questions while you're sleeping all the time. Like you have to be like, oh, woke up in the bed, I'm like, oh, yeah, I wonder if I bundle these products together. Oh, shoot, I need to build out my spreadsheet tomorrow. I mean, you could ask ChatGPT nowadays, of course, but it's still not the same. Like it doesn't have all my data all the time synced it together.
- [19:50]
A
Yeah, I mean that's how we ran all of autocever was literally on these. Started as a small spreadsheet nine years later. It was a massive, super complex thing because I bolted things onto it. We bolted things onto it as we, as we needed to answer questions.
- [20:05]
B
You know, I remember that too. When we had my physical product businesses, I remember thinking when I was building these spreadsheets and as I was doing this, I'm just like, there's not a chance all of my competitors are doing this level of thinking. There's not a chance. Like, I just don't believe that they would be thinking about it like this all the time. And I think that I'm probably right. I think the majority of. I think there's the top 1% were thinking the way I was thinking and probably even better. But I think that's why there's winners and losers of like in business is not necessarily because a lack of product or lack of capability. It's more just like they weren't asking the right questions and you weren't putting.
- [20:41]
A
You're absolutely right. And that's what I see with Pentane and the companies that, that we sell to and talk with. And frankly, the ones that I want to be really helpful with and I want to build solutions, whether they're technology or otherwise, to be really helpful with are those, those that have the higher propensity to end up in that losing bucket. Not because they're not smart, not because they don't have awesome products, because they just don't figure out the stuff that frankly, it's like the blocking and tackling a business that we will, we will do that stuff for you so you can go and focus on innovating your product and selling to more customers and doing the things that are probably the reason you started the company.
- [21:16]
B
Is it safe to say that you guys came out safe? Maybe it's bold to say this, that you guys are essentially trying to be the AI CFO for E Commerce company.
- [21:25]
A
I think, I think. Well, I would, I wouldn't say it's too bold. I would say that it's not accurate right now because I'm very, very, very careful about how we use AI. I use personally and professionally, I use it a ton. I'm basically like, I'm. I'm that vibe coder that now thinks they're a CTO and can go and like build. I can build crazy stuff that I couldn't do six months ago. And that's always been my biggest problem with tech company, is that I can't work harder and make it go faster, which with Bottle Keeper I could. And with everything I've ever done, I could. And now that's slightly different. But inside of pentane itself there is so much critical data and so much math. I don't, and I can tell tell you this firsthand because I experience it a lot and people can argue. I'm happy to argue this point heavily. AI is not yet really good at math. It gets it right most of the time, but sometimes it doesn't.
- [22:18]
B
Yeah, you have to check it all.
- [22:19]
A
The time and then unless you really know the math, you're not going to know when it's right or when it's not. And the worst thing that we can do is have an AI giving somebody guidance on their business and tell them to go do something that's that 5% wrong.
- [22:32]
B
Gotcha.
- [22:32]
A
So, so it's very, very, very math heavy. We do use AI for a bunch of different stuff.
- [22:36]
B
Sure.
- [22:37]
A
You know, categorizing line items and P and LS and things like that that are much more straightforward.
- [22:41]
B
Very cool. Yeah, I, I would say that, yeah, it's true. When I'm using Chat gbt, I'm like. Or any other, other model, I'm like, I'm doing, I'm having to do math, like run a projection for me. I know kind of like what the ballpark answer is, but I just don't. I'm lazy so I want them to just do it for me. And then it doesn't make sense. And after a sanity check I'm like, that doesn't seem right though. And then it's like, oh, yeah, of course you're right. It doesn't seem right. You know, and it's like, yeah, you can't really have that with mission critical type of things such as like, I don't know, gross margin and roas. Like if you spend a thousand dollars a day, like at this same. Yeah, you need to be right.
- [23:17]
A
Yeah, we can't tell somebody to double. I mean that company that we turned around at the very beginning of this their problem. They were losing $100,000 a month. Their contribution margins, their, their, like underlying margins were really healthy. They just weren't remotely spending enough ad dollars to create enough contribution margin, which is what is left after your revenue, minus those sales related expenses. They weren't spending enough to create enough of those dollars to pay for their payroll, to pay for their fixed expenses in the business. So what the math told them is they needed to 3x their ad spend. Yeah. Like, I knew mathematically that that was correct. I knew what would happen. Like the roas, which was at eight super high. It could come. It could come down to three. Yeah. Literally come down to three. And they go from losing money to. To break even at a 300% of their ad spend. But, like, imagine that that math is wrong.
- [24:09]
B
Yeah.
- [24:10]
A
I mean, that's so dangerous. Yeah.
- [24:12]
B
That's so cool, by the way. But I'm like, also like, that company is their physical product brand.
- [24:16]
A
Yeah.
- [24:17]
B
What were they doing to get an AX Roas? I mean, that's. I know that happens, of course, but it's like, it's pretty damn hard to do that. And that's really exciting that they're doing that. Are they doing anything specific that you're just like, I don't know, Dash?
- [24:29]
A
I mean. Yeah. I mean, part of it is the price of their product. They're selling a 300 product.
- [24:34]
B
Okay.
- [24:35]
A
So part of it is just the nature of the size of that product. I mean, we were at Bottle Keeper. We were selling $40 products. Our AOV was like 60 bucks. So that would have been. That would have been sick to get a data X roas. You know, that was, that was like early Facebook days. But, but part of it is the. Part of the business that they are really good at is the content and it's the product and it's the getting the community engaged. And like, they're really, really, really good at that. They just. Same thing. Like, they didn't understand the finance side of the business because the CEO is a product designer. He's not a finance person, which is how most companies get started. Right. You, like, you have a problem, you solve the problem, people start buying that solution and you're like, shoot, okay, I'm CEO.
- [25:14]
B
Yeah, that's very true. Yeah, very, very true.
- [25:16]
A
That's how it goes.
- [25:17]
B
Very cool, man. Who's like, perfect fit for Pentain at this moment. Where you, where you guys are at today? Um, I mentioned like, what. What kind of, what kind of business do they have? How. How big are they revenue wise? Like to makes it to where it's, it's a solid winner.
- [25:32]
A
Where we can be the most helpful. And this has changed skewed down over time. Where we can be the most helpful is startup to have about 5 million in revenue.
- [25:42]
B
Okay.
- [25:43]
A
So most of our, most of our companies are. Are roughly half a million to three. And what I found is as we get above five, we get into this realm where either the company really knows what they're doing or they think they really know what they're doing and they want a bunch of custom things. And I don't. That's not the game that we want to play. I mean, and maybe we grow into that over time. That's fine. That's a decision for later right now.
- [26:08]
B
But so zero, would you say?
- [26:10]
A
Zero to five is like we have true startups on there that are like working off a projected P and L, which is great because my position is any, you know, anything is better than nothing. So starting with nothing is. I mean, you're literally just flying blind. So if we can use something projected then, then we get to adjust it.
- [26:29]
B
Would this serve? I think the answer is yes. But would this serve like a print on demand type of business for you? Are you familiar with print on demand?
- [26:37]
A
Yeah.
- [26:37]
B
Cool. So a lot of listeners to this right now are print on demand sellers. People have zero inventory. Um, or they're also digital product sellers. Like they literally sell templates like a fitness planner, fitness template, whatever, and they sell for like 20 bucks or 40 bucks or a hundred bucks sometimes. Does pentane work for them? Does it serve serve them as also a hundred percent.
- [26:58]
A
Let's. Yeah, let's be clear. The math inside of pentane is the same math that Exxon Mobil runs off of, which is the same math that Yeti Coolers runs off of, which is the same math that the landscape company down the street runs off of.
- [27:11]
B
Cool.
- [27:12]
A
Though who we are targeting is E commerce businesses because it's where I've had the most recent success and I can be really helpful there. And we can point to that, sure. But I mean, we legitimately have a $2 million a year landscape company here in Bozeman that operates on it.
- [27:25]
B
Oh, interesting.
- [27:26]
A
Yeah, I mean it's all. It's just the margins. It's just using math to break down how the business makes money so you can get. Get clearer on your decisions.
- [27:34]
B
Very cool. Do you use pentane for pentane?
- [27:36]
A
I do, yeah. It gets there. Gets a little bit trickier in the SaaS model because we get into like net retention and all these things. And so I will build stuff for that later, but really, really focused on, on that.
- [27:48]
B
I understand they're two different piece. You mentioned before we hit record that this is maybe not so relevant for the audience, but I'm personally interested in this. You mentioned that E Commerce was easier to build than a technology company. I think what you meant is easier to build. Like of course, product wise, that's, that's, that's a given. You expected that probably. But mostly revenue wise, it seems like it should be easier because your gross margins are higher and because like, I don't know, like for. I agree with you. Why do you think that is?
- [28:24]
A
I think that. So if I look at the consumer product, if we, if we look at the product side of it, because that is, that is obviously a big side of it. With a consumer product, you have an idea, you make a thing. In our case, we proved the thing out. We use crowdfunding as one of those things to prove the thing out, make sure we could get people to swipe credit cards that weren't related to us. And then you make the thing and three or six months later, like you have the thing in your hand, it's like, great, let's go sell the product. With software, you make the thing and then it's like the finished goal post just moves down and it moves and it will move for forever if you let it.
- [29:00]
B
It's supposed to. Yeah, yeah.
- [29:02]
A
And it just does. And it's like the distance between the movements gets a little bit shorter and it changes. But, but getting to the point where you have the product that, that sells itself just takes so much longer and there's so much more iteration and it's obviously dramatically more expensive. And you know, and it's gotten a lot better in the world of AI, what we've done to date to build pentane, you know, two years ago, three years ago, it would have been four times what it cost to, to build and develop today. And so we're very conscious of that. But yeah, it, it's a, just a totally different thing.
- [29:33]
B
How about get. So you didn't mention like self serve or like self selling itself. Why do you think that's harder? Is it because it's like with a physical product, a consumer good, you're actually getting that, getting that bottle. Whereas software, it's like a digital sale. So it's like they're not necessarily getting anything physically or. What is it about that you think?
- [29:51]
A
Yeah, I think, I think that it's More binary. I think it's when you have the physical product, people either like it or they don't like it. And maybe this is true in software as well. But I do think that there is an important distinction with the physical product. They either buy it or they don't buy it. They don't. You don't have to meet with them. And then they say, ooh, I don't like this little angle here. I want you to. I want you to tweak that angle. And then you meet with the next one. They're like, oh, no, I'm cool with that angle. I want you to tweak the color. And you're like, that doesn't happen in the physical product space. Sure. And you're also. I mean, we're selling a $20 product and then a $30 product and then a $40 product. Like, it's totally different than selling something that's 100 or 200 or $1,000 a month. That's this recurring thing that in the world of E commerce, like how many, you know, how many of those things we ended up with at the end of Bottle Keeper? And that was five years ago. Four years ago.
- [30:38]
B
Yeah.
- [30:39]
A
Like, you were just so burned out on getting sold software. So I think that's a whole nother. Whole nother challenge in. In trying to sell to E Comms is. Is breaking through that.
- [30:49]
B
Of course.
- [30:50]
A
All that noise.
- [30:51]
B
Love that. I think it's perfect. Time to wrap up and go to Rapid Fire. Ready?
- [30:56]
A
Ready.
- [30:56]
B
What's your favorite business book, actually?
- [30:59]
A
How to Win Friends and Influence People.
- [31:01]
B
Dale Carnegie.
- [31:03]
A
Yeah.
- [31:03]
B
It's classic.
- [31:04]
A
Yeah.
- [31:05]
B
What's the one thing that you wish that you knew before starting your business?
- [31:09]
A
This business. That it was going to take five times longer than I thought it was going to take.
- [31:15]
B
What's the worst advice about business that you've ever received?
- [31:18]
A
Oh, anything that you've ever heard someone say that this is the way it has to be. So like every story that you've ever heard where someone says, oh, this is the way that you do it. This is the way you have to do it. Like, all of that is absolute garbage. And literally that's. I have a sign here that says, question everything. Just take everything you. You get fed with a grain of salt and prove it for yourself. Do it differently.
- [31:38]
B
Who do you think should be a business owner?
- [31:41]
A
I mean, actually, part of our long term with pentane is that I think anybody should have the ability to be a business owner if they want to. Part of the risk that comes with Starting a business are all the unknowns. And if we can solve 60% of those unknowns we will make. We will take more companies from that losing pile and put them into the winning pile.
- [32:02]
B
I love that I tend to agree with the majority of that. I think ever be we, we have this, this saying that we say is we believe that every single person is, every human is a creator and every single creator should own a business. Because I do believe like entrepreneurship in business it can the barriers continue to, to drop and we still as humans we still want the same things which is freedom, we want safety, we want security. And there are vehicles for that. But typically the answer is not in, in a typical regular job I'll just say that like I just don't think that there's really any security in having a W2 job. Perceived security there is, but there's not actual like self reliance is a very, very important thing. And so I do believe that anyone that has a vision for their life, they should, they should be a business owner. Not as, not, not that it'll be easy and not that they might fail.
- [33:01]
A
No, it's not, it's not supposed to be easy. Yeah, nothing good comes easy. But if we can take all those, you know, if we can take a significant portion of those people that have like how many people have you talked to that are like ooh, I got this idea. Like literally everybody we know at some point is like has had some idea, had some thing because they're creators.
- [33:19]
B
That's like it's literally God's way of putting their little voice in their head of like you can do more, you can do.
- [33:23]
A
They had a problem, they figured out an idea how to solve that problem for them. That's like 99.9% of business startups. But how many of those people actually go and start to execute on that? Very few. Like a single. Yeah. Single digit percent of that. And how do we impact that number?
- [33:39]
B
Exactly. And so that's probably where you're at. And to me where Everbe's at is more like how do we get that number to be bigger to actually start. That's, that's our, that's my job. Right. Is ever be because what happens is you have John who is like your cousin or your brother in law who's super smart, works at a company like super smart. He wants more out of his life but he's not willing to take the like take that, make that jump and he has these ideas and he comes with this idea. He's like dude, I just Thought about this idea and it's just like. And I'm like, that sounds like a really cool idea. I think the world would really benefit from that idea. You should do that, John. And he's just like, yeah, yeah, maybe one day. How many of those conversations happen where just like amazing ideas are just die. They die before they're even started.
- [34:23]
A
Yeah.
- [34:24]
B
And how. Where would the world be if we literally just could take that creation, put it into the universe and see how it does? And that's what ever be. That's what that's my thing is I want to. I want to grow that number. How we create more entrepreneurs.
- [34:36]
A
And for John, why doesn't he do that thing? Risk. Right. And as an entrepreneur, you know, and anybody that's listening to this, that is an entrepreneur knows most of what we do in a given day is just mitigating risk. It's trying to figure out how to lower risk. And as we get better at that, it's like you need to create a risk imbalance. We need to minimize the downside and maximize the upside. We want that imbalance.
- [35:00]
B
Yes.
- [35:00]
A
So how do we minimize the risk for John to go and do that? And I firmly believe that at least half that risk comes on the backend financial side of a business. That is like another language to John because John's never done that and that's okay. So how do we take that off the plate and so he can focus on mitigating the risk on the other side, which is product. Which is where you guys sit.
- [35:20]
B
Yeah, which is product. It also probably sits in uncertainty of just how the how of like how to create a refund policy. Like people get stuck on things. You know, it's like how to create a terms of service. Like, dude, you don't care about that right now.
- [35:34]
A
Yeah, you're a customer.
- [35:35]
B
That's what you need to do, you know, so. Or how to get a conversion. Like my PDP to convert. It's like some of that stuff has already been proven out by so many other companies before us. Like, you don't need to be thinking about all those things all the time. And so, yeah, it's very interesting. It's fun. It's fun to have the conversations though.
- [35:52]
A
Yeah. Totally agree.
- [35:53]
B
Adam. Where can people find you? Where can people find Pentain? Learn more about you?
- [35:57]
A
Yeah, I don't spend a ton of time on the socials, but I do live a bit on LinkedIn in this world of pentane. So you can find me there. You can find pentain.com. we did just launch a new product right now. It's free. That's called a pulse check. You literally throw in a P and L or paste in a P and L and it gives you an insane analysis of your business, tells you what's wrong, what's to fix, how to fix it, how to set your ad budgets, how to get to break even, how to deal with pricing. All of this we can get from, from a P and L. Wow, it's an interesting report.
- [36:27]
B
How does that compare? And I know people, I'm asking for other people. How does that compare to dropping in ChatGPT?
- [36:33]
A
That's a huge question. ChatGPT doesn't understand your business. Like putting in your P and L into ChatGPT, which is a thing that I do a lot because I want to see how those things continue to do and evolve. One, it doesn't understand enough yet. This would all change, but it doesn't understand enough yet. The nuance between the different types of expenses that live in your P and L. So it just inherently gets that wrong and then 5% of the time it actually does the addition wrong to put those expenses into buckets. And then beyond that, you have to know the questions to ask it in order to get the information that's actually useful to you, which is part of a big problem. A lot of super early stage operators don't. They don't know what they don't know. They don't actually even know the questions to ask. So and I, and so that's the thing that I built in my, my vibe coding CTO role and it's this insane report that gives you. It's literally like I've been paid thousands of dollars an hour to go in and do analysis on companies. It gives you that in a document from your P and L for free in 60 seconds. It's nuts.
- [37:36]
B
Very cool. Amazing. Thank you for that answer and makes total sense to me. Adam, thank you for the time. If anybody's wondering listening to this right now, you can find all the links that that's relevant to Adam and what we talked about today in the show notes or the description below. Also, if you're wondering if there's ever going to be a pentane and ever be store integration, Adam and I have not talked about it yet, but we will talk about it.
- [37:57]
A
Cool.
- [37:58]
B
Adam, thank you again. I'll talk to you soon.
- [38:00]
A
Thank you. Appreciate it.