Sizing Image

241: Evolutions in Lifecycle Marketing & New Approaches to Creating Wealth

Posted by Austin Brawner on March 3, 2020

 

There is more than one way to create wealth in ecommerce.

While many entrepreneurs follow the path of bootstrapping a business and hoping to one day be acquired, another option is to start on the acquisition side, and grow a portfolio of successful companies.

Our guest today has done both. Drew Sanocki is CEO of AutoAnything, owner of PostPilot, and an expert at lifecycle marketing.

He joins us to talk about the evolution of lifecycle marketing and the big role direct mail is playing in brand loyalty and repeat purchase rate, as well as how mergers and acquisitions can help your brand, and why M&A are his big focus for the upcoming year.

I always learn a lot when we chat with Drew and I hope you enjoy!

Episode Highlights

  • 9:05 Why Drew is so excited about direct mail marketing.
  • 12:08 The role of direct mail for Drew’s 9-figure dropshipping company.
  • 14:54 Bringing direct mail into traditional lifecycle marketing and how it enhances your brand.
  • 18:55 Exploring brand partnerships in the direct mail space.
  • 19:46 Prospecting with direct mail.
  • 21:56 Syncing direct mail with Klaviyo and segments that are working particularly well.
  • 27:48 The shifting customer journey and how Drew sees it evolving in the near future.
  • 32:49 Why merchandising can be the best kind of marketing.
  • 36:11 What Drew’s excited about in this new decade and what he sees as the quickest way to grow a company.
  • 39:13 Merger and acquisition opportunities that can help your brand.
  • 42:38 Why most business owners have a blind spot to the acquisition process and how Drew would get started building a portfolio.
  • 46:15 Bootstrapping vs acquisition — does it matter which comes first?

Links And Resources

Are you ready to scale up your ecommerce business?

If you want to grow your business faster and more profitably, Brand Growth Experts can help. We’ve worked with hundreds of entrepreneurs and marketers to help them stop leaving money on the table and take their businesses to the next level.

From personalized coaching to live workshops, Brand Growth Experts will work with you side-by-side to define your marketing strategy, scale your advertising, and hire the team needed to take your business from six to seven figures, and beyond.

If you’re ready to profitably scale up your business, head over to BrandGrowthExperts.com and learn how we can help.

Sponsor: Klaviyo 

What do sophisticated ecommerce brands like ColourPop, Huckberry, and Chubbies all have in common? They rely on Klaviyo to supercharge their growth.

Klaviyo helps you own the customer experience and create deeper, valuable customer relationships. And the results speak for themselves—those brands have made more than $3.7 billion in revenue through Klaviyo in the last year alone.

Creating memorable marketing moments for your customers has never been easier. There’s a reason why 67 brands move to Klaviyo every day.

Find out why, visit klaviyo.com/influence.

Sponsor: Lunar Solar Group

Are you struggling to grow your brand with your in-house marketing team? Or do you feel like your agency doesn’t fully understand you and your business goals? Maybe it’s time to kick off the New Year or new quarter with a new agency, one that had a 96% client retention rate in 2019.

Lunar Solar Group is transparent, dependable, and best of all, they’re tirelessly hardworking. I’ve had personal experience with them and I really like the work they do.

You can also ask any of their clients: Super Coffee, Enso Rings, Pampers, about their improved conversion rates, landing page offerings, and custom funnels.

Lunar Solar Group treats every client, big or small, like a number one priority. 

Their performance creative division, which helps create studio product photography, lifestyle photography, video, and ad design truly moves the needle. 

Their work is completely data-driven, and on average clients will see a 20-30% lift in ROAS from that new creative.

Lunar Solar Group is truly the marketing agency that, as they say, does good work, and never sleeps.

You can learn more about them at LunarSolarGroup.com

Transcript

Click to Expand Hide full text

Austin Brawner: What's up everybody? Welcome back to another episode of the Ecommerce Influence podcast. My name is Austin Brawner.

Andrew Foxwell: And I'm Andrew Foxwell and we have a returning guest today. One of my favorite people in the industry, Drew Sanocki.

Austin Brawner: Oh yeah, 100% we... Drew's the guy we've had on the podcast a few times. It's always a pleasure to talk to him. It's always a pleasure to do a deep dive into what Drew's thinking about and he, I think, is a different voice in the industry. Talking about different things than most other people, what many other people are talking about in the industry. And yeah, definitely it was a great conversation today. I'm super excited to share it with you guys.

Andrew Foxwell: Yeah, I think you'll learn a lot. We talk about everything from his business, we talk about direct mail, we talk about profit margins in M&A and, Oh man, anything you can imagine. This is a really good episode.

Austin Brawner: Food allergies.

Andrew Foxwell: Food allergies. Yeah. This is a really great episode. So let's go and welcome come Drew to the show.

Austin Brawner: Drew, man, welcome back to the show. Always a pleasure to have you. Seriously. We're always really excited when we get a chance to chat with you.

Drew Sanocki: No, no, seriously.

Andrew Foxwell: Normally we're joking and it's not true. What we do is we just lie a lot, but in reality now we really are excited.

Drew Sanocki: All right. "Hey Drew, welcome to the show. Actually we're, we're kind of excited to have you on the show."

Austin Brawner: Well, you know what I mean? So I'm always excited about having guests on this show and I always say that, but when I'm like, "Oh, we're going to get a chance to talk to Drew." I'm extra excited because I always enjoy our conversations.

Drew Sanocki: I am, too. I got to meet... Well, I met you before Austin, but I've got my family to meet you in Austin, Texas, which was a lot of fun, I guess a month ago. Two months ago at this point. And yeah, that was a lot of fun.

Austin Brawner: We got barbecue, which was great. We got some ice cream. Some great ice cream. We had one of the funniest things ever was with... We're getting ice cream and the person serving ice cream asked your son if he's got any allergies. And he, he just goes...

Drew Sanocki: Shellfish.

Austin Brawner: Shellfish. 

Andrew Foxwell: Hey, at least he knows. I like that about him.

Drew Sanocki: He knows. He tells everybody.

Austin Brawner: The shrimp and scallop ice cream is off the menu for the day. But yeah, it was a lot of fun.

Andrew Foxwell: Somehow growing up my mom convinced me that I was allergic to eggs and so I told people I was allergic to eggs, which is absurd because eggs are in everything. And then finally in college, I was hungover one time and I was like, "You know what? Like if I'm just... if this is a disaster and I got to go to the hospital, I have to go to the hospital." And I ate eggs and they were incredible and nothing happened.

Drew Sanocki: So how long had you gone without eggs?

Andrew Foxwell: Oh God. Years. Maybe my whole high school-

Drew Sanocki: Did you ever confront your mom?

Andrew Foxwell: I didn't ever question it. I don't know. It was so weird. And I've told Gracie this and Gracie's like, "That's, that's crazy."

Drew Sanocki: It is crazy.

Andrew Foxwell: Yeah. I was like, "What am I doing?" And the other thing is that it was if it was not too much mixed in, it wasn't bad. But if it was like I couldn't eat like straight-up scrambled eggs. This is what I thought. I had this twisted idea. I have no idea where this came from. But anyway, this has nothing to do with ecommerce.

Austin Brawner: How hungover were you to decide, "I'm going to go to the hospital for this?"

Andrew Foxwell: Well, I remember very specifically it was the first time I'd ever had mixed drinks. I didn't know my limit of mixed drinks because I'm from Wisconsin so we'd only had beer up until this point. Not like I drank a ton in high school, but you get my point. And I had this mixed drink and so I had 10 or something. I felt like death. I couldn't move. And these are like crappy, sugary, whatever I was even having. I have no idea. Fell asleep in the hallway. These aren't good moments. But I woke up and I was like, "I got to eat something".

And so I went and ate something and I was like, "Whatever. I'm getting eggs. Like that's it." I think they were bacon mixed in, too. So I was like, "You know, like if I got to go to the hospital I got to go. This is what it is".

Austin Brawner: Getting a little bit back on track. I think one of the reasons we wanted to bring you back on the show, Drew, was that recently you came into the Coalition and you hosted a training talking about how to increase sales and delight your customers with direct mail, which is something you know you've been working on for a long time. Something that you've been using for years and you have some really interesting insights into basically the life cycle marketing process and how to use direct mail as a lever to be able to kind of continue to drive... Just to focus in your customer database.

So I'd love to hear kind of where direct mail kind of plays in your current business. So AutoAnything. And then why the heck you bought the company called Post Pilot and are so excited about direct mail?

Drew Sanocki: Yeah, well I mean I think to answer the second question first, I've used direct mail for my whole career in ecommerce dating back 20 years. So I started my first retailer in '99 and there was no Coalition back then. There were no podcasts. I had to figure out how to market.

And I went to the library and I got a bunch of books out on catalog marketing, database marketing, because that's all there was. And I'm reading this stuff and I'm like, "This applies to ecommerce". And it was all about how to mine your customer data and things like RFM if you've heard that term, but it's a way to sort of score your customer list and build out segments and market to those segments. Right?

So I started doing it in an email and I started doing it in direct mail with postcards. And then later on Facebook and Google came along with their platforms, and you can do the same thing in remarketing. And so the general idea is hey, you want to target a certain customer with a certain message, no matter where he or she is, right? Whether they open an email, view an ad or open their mailbox, right? So I thought of direct mail is just kind of fits into that equation.

I mean, there's really two parts to direct mail. There's prospecting. Just like a Facebook campaign, right? You could do pure prospecting where you're going out and you're trying to find new customers, or you could do the remarketing or life cycle marketing where you're targeting your existing customers, right?

So I've always operated on that latter side because that's where the high returns are and for 20 years I've been doing that manually, meaning like, "Okay, I'm going to go into Klaviyo, I'm going to go into Mailchimp. I'm going to export a list of my customers, upload them to a postcard provider, and send out mail."

And I just began to think like, "Man, there should be an app that does this. That plugs into Shopify or WooCommerce or Magento and automates the sends just like Klaviyo." And that kind of led me down to acquiring PostPilot. So I'm not sure, did I answer both questions or only one of them? I think I only answered one.

Austin Brawner: Well, you dove into why you bought Post Pilot, which I think makes a lot of sense, right? Just the value proposition of like, "Hey, what Klaviyo is doing is really, really cool for email and now SMS. Can we do the same thing for postcard marketing?"

I think that's a no brainer as people have seen how powerful it is to run triggered emails and that sort of thing.

So obviously if you guys have listened to previous episodes, you know Drew runs AutoAnything, which is a nine-figure dropshipper. And I would love to hear kind of how you think about direct mail for AutoAnything. If you are currently running it and how that plays into what you guys are thinking at that scale.

Drew Sanocki: Yeah, I mean it's really the same as I would imagine a small store should think about it. And that's first you just think of it as another channel to touch your customers, right? To market to your customers. And it's an effective channel and it's a cheap becoming increasingly cheaper channel to do that.

We basically mirror many of the lifecycle campaigns we've got in our email program and in our remarketing programs, they're reflected in our direct mail program, too. So one example. Second purchase campaign. A customer comes in and buys product A, and you know product A goes with product B. So 30 days later in email we send out, "Hey, if you haven't bought product B yet, here's an offer on product B". Well now we can put that in a postcard campaign, too, so they get the same messaging via their mailbox.

Andrew Foxwell: So a couple different things on direct mail for me. The second purchaser thing makes a ton of sense. Let me just say as a person that has poo-pooed direct mail, publicly, a public poo-poo of this concept, what is been interesting this year to me is that the direct mail that has come, the pieces that stand out are very brand focused and they help me to see their products in a magazine basically style format. It's not necessarily something that's just a one postcard, although some of those are nice and they have a deal with them.

And if it's a good deal we'll respond to that. But more than anything I feel like direct mail gets across the brand better than anything online can. You can build a super nice website, you could have them where you know people can 360 rotate around a room if you're a home design company or something. But the design is a huge part of it.

Your thoughts on that? Because I think there's two routes. There's a simplicity route, utility route of putting a deal out there. And then there's also this idea of a longer, more comprehensive, "Hey, here's who we are. Here's what we do. Here's a lifestyle we're trying to help you lead." Do you think that's true or is it more nuance in that?

Drew Sanocki: No, I mean you're talking about two things. First are just sort of the mechanics of any lifecycle campaign. I mean those are your highest ROI campaigns, whether they go out in Facebook, email or postcards. Second purchase, abandoned cart, MVP, win-backs. So really you take those mechanics and you flip them into direct mail and nine out of ten times you're going to have high ROI campaigns. So that's just like the mechanics of why it works.

But I think what you're getting at is the brand-enhancing element of sending out a tangible postcard. I fall back on this book, How Brands Grow by Byron Sharp. He's a Australian professor who talks a lot about how brands grow and the book is all evidence-based reasoning as to how the biggest brands work and how they grow. And it really boils down to ubiquity at the point of customer consideration. So the more touchpoints you have, if the customers are an Amazon, you want to be on Amazon. If they are at home flipping through the mail, you want to be in that pile of mail. And if they open their inbox, you want to be there, too. So it's just a great way to deliver something tangible.

I mean, like you Andrew, in the past year I think I've gotten postcards from all the biggest direct to consumer brands, right? Bonobos, Casper, Warby Parker. And when I dug into it, like why is this happening? First, there's the mechanics. There's the fact that it just kind of works. But there's been a lot of research around how customers perceive mail and unlike an ad, which they often try to close on a site, they view it as an intrusion, customers perceive mail as a gift from the sender, even junk mail.

So I don't know how long this will last for but today they go to the inbox and there's a little dopamine hit when you open the inbox and get some mail. And that's why if you drill down and look at engagement rates and open rates it's 80% for mail. Even junk mail is the open rate. And you know, for email it's 20% right?

So people open it, they engage with it, it's something tangible they can throw it on the coffee table and other people look at it. Conversion rates are really high. So I think that's kind of why you're seeing an emergence of the channel. Or re-emergence.

Andrew Foxwell: Sure, sure. Yeah, I agree. I agree with that. I mean I think it's something that it works and it's in front of people and it's another way to get in front of them. Especially as you're a brand looking for something incremental, in terms of just getting another place to put it in front of people.

One tactic I'm curious about is, and then any other tactics that you're thinking are really working, I heard a lot about it this year was putting mailers for different companies that are similar to bigger companies. The MVB companies are putting an ad for that company in a mailer in that package. So if you buy from Bonobos, you get an ad for Allbirds in... I'm not saying this happens, but it's that type of thing.

And this was heralded as kind of a big concept. It's happened to me a couple of times. I thought it was cool but not huge innovation. Are there other things like that with print or with direct mail that you are hearing about or you're testing or you've found to be working?

Drew Sanocki: Well I definitely see a couple of services where you can join with a bunch of other retailers and send out a postcard in sort of a package with other brands. And that would be I'm guessing more on the prospecting side, right? It's not as much driven off of your existing customer behavior. That's sort a prospecting effort.

I've also noticed as a consumer, increasingly I get packages from say Bonobos and in the Bonobos box was an ad for BaubleBar, which is a jeweler. So someone at Bonobos figured out that there's a high likelihood I've got a wife who would buy something from BaubleBar.

And that's just a great example of a distribution partnership where you find brands that are roughly the same size and you just... But I'm competitive same customer. I'm competitive product, and you get on the phone and strike a deal where their inserts go in your packages and your inserts go in their packages and that can be really effective.

Austin Brawner: Just to dive in because I just was looking at this, so there's a company called Share Local Media, which is what you guys are talking about, which literally does... They take put an insert of five postcards and do prospecting and they...

Drew Sanocki: That's the company that does the prospecting. Right.

Austin Brawner: Yeah. And they're doing it on a couple of things like zip codes, neighborhoods. They do it looking at other people who have bought from these digitally native brands. So if they buy from one, they may be a first mover. It's like the whole Kickstarter scenario.

That if somebody is likely to support one Kickstarter, they're more likely to support another one. So you're targeting ultra Kickstarters, those people who love kick-starting stuff. If you've got a Kickstarter, that's the best people to get in front of. It's kind of that sort of situation. And I think it's really, really interesting from a prospecting side.

Drew Sanocki: Yeah, you're right. You're talking about the prospecting side and although it looks new, it's not. I mean this is how catalog retailers often launched, right? Dating, I don't know, back 50 years, right? They would buy a list of customers, put the catalogs together and send them out to that list and hope to break even on the first send and then start making profits on the next send. And catalog retailers today do the same thing to launch.

And I think anybody listening to the podcast could probably do the same thing. You basically contact one of three or four different address brokers and put together a direct mail program. So that's all on the prospecting side.

And then I think what Andrew was talking about a bit earlier was sort of this incremental revenue you could get by just opening up a new channel for your existing customers. Right? And that's where you get another 10 or 20% of high return revenue by just mining your customer data the same way you're doing on email through a postcard campaign.

Austin Brawner: 100%. And one of the things that I am fired up about or get excited about when I listen to you talk about what we're doing with PostPilot is you guys built a Klaviyo integration and it allows you guys to kind of piggyback on some of the data analysis that Klaviyo's doing so you can create segments in Klaviyo.

One of the things that they built over the last few year is an expected repurchase date. So you can create a segment of people and target it based on their expected repurchase date and push that over and be sending people emails as well as direct mail when people pass their expected reorder date. Right.

Which is, I think, pretty darn cool and something that we haven't really been able to do before. I mean, I think one of the biggest limitations in the past has been just the logistics of trying to get postcards out to the right people at the right time.

Could you talk a little bit about what you've seen working on the segment kind of Klaviyo integration side of some of the companies using PostPilot?

Drew Sanocki: Yeah. I mean the general idea behind Post Pilot is that it pulls in your customer data from Shopify and if you've used Klaviyo or MailChimp's automation feature, it's very similar. You can carve out predefined segments. You carve out a segment of one time buyers who haven't bought in the past 30 days or customers who bought product A over the past 60 days or customers that haven't been around in 180 days. Whatever it is you carve out these segments and then dynamically, every time a customer goes in or out of that segment, it could trigger a postcard campaign, right?

So you can do things like, "Hey, all customers who are now abandoning a cart, they're going to get a postcard or I've got a win-back postcard that's going to go out to all customers who haven't been on the site or haven't ordered in 180 days or I'm going to welcome all new customers with an offer on a second purchase, right? That goes out to all new customers." That's the general idea of the app.

And then Austin, what you're talking about is we just built an integration to Klaviyo. We found that there were essentially two blocks to people kind of embracing this, right? The first is that they get hung up on the design side. They might just get paralyzed on what to put in a postcard and the second is that they don't want to go through the trouble of creating the segments, which is probably the same issue you have with a Klaviyo user, right? "I don't know where to start."

So we said, "Well, at least attacking that second block, what if we integrated with Klaviyo to the point where you know you do all that work in Klaviyo, you create your lists and your segments in Klaviyo." Let's just import those dynamically, keep them updated and then you know you've got the segmentation piece done, right, so it just kind of rides off of that in Klaviyo. You don't have to set up the segments in the app. You set them up once in Klaviyo and then the app will send the postcard.

Austin Brawner: Yeah, it's awesome. That again removes a lot of the friction once you've set things up just to be able to push things over and have things operating at the same time.

I believe that most businesses are spending too much on acquiring new customers and not enough on nurturing their current customers. I think that's one of the challenges that I've seen many businesses face. What's that balance between the two? And that's why I love the opportunity to just kind of roll out a new channel without a ton of new work.

Drew Sanocki: Yeah, that's the idea. I mean, we're working on the design piece right now. We've got a concierge service where we could design the postcard for you, but it'd be nice to kind of dynamically pull in some of your email content maybe to create a postcard template. And that's kind of one thing we're thinking through.

Andrew Foxwell: I think it's interesting to hear and it's good to talk about direct mail and hear kind of what the opportunities are and how it can be integrated. The thing that comes to mind hearing you talk about this for me, Drew, is one, at your company, what is your general take on how someone actually gets to you and actually buys.

I mean, what does that whole thing look like? Obviously it's digital, but based on the information you have, how are they getting there and how do you think that has shifted in the last six months? The reason I asked this question, the why behind it, is I feel like for a long time we understood the path that people were taking or we had a general idea as ecommerce marketers and I feel like it's changing very rapidly.

An example is we had a client who they have a fairly Instagram-forward audience and we did a big customer survey that had a pretty decent response rate, 60% response rate, and out of those people, 58% of them said that Instagram was the most important piece in their customer journey. And obviously this differs by brand, but I feel like that's shifting significantly.

So to you it's like one, what's happening with your company? How do you think someone gets to you? And then what do you think is shifting in the next six to twelve months?

Drew Sanocki: Yeah, I mean it strikes to the core of one of the bigger issues we've had, which is new customer acquisition. AutoAnything is a dropship retailer. Which I don't want to say commodity dropship retailer, but I would say that most of the brands you can get on AutoAnything you can get elsewhere. Amazon, other competitors and also the brands increasingly going direct, right?

So that's sort of the strategic backdrop and because of this, it's like a business that has some challenges on the acquisition side. So it's extremely long tail. We've got 5 million SKUs on the site. The customer is very sort of utilitarian so they search for the auto part or the SKU that they want. They typically either through SEO or Google PLAs end up on our product page and then purchase and buy, right?

On the other end of the experience would be something like Huckberry where it's a rich content experience that kind of pulls people in with the content and then sells new and interesting product that the customer might not know about.

We're on the other end of the spectrum where it's very utilitarian. The customer probably knows exactly what they want. It's bottom of the funnel. I'm searching for it. I ended up on this site because it's got great legacy SEO and it's been a player for, I don't know, the company's been around for 40 years but online for at least 20. And they click and buy and I think part of... I don't know that it's changed that much other than personally I see it going away eventually. Right?

I think as Amazon gets into the space, as the brands go direct, we've got to figure out a new customer acquisition angle. We've seen competitors moving into the category more on the paid side. SEO is always a challenge. So for us I think it's how do we navigate that and find new sources of customer acquisition.

Austin Brawner: Yeah, it is really interesting watching how people are reacting to the fact that what has worked for a long period of time... Like when you look at dropshipping and the history of dropshipping and when people were putting out courses about dropshipping and how it was going to change your life and that sort of thing, it was always reliant on SEO over time or it was basically filling the need that you would need...

You need people to be searching for something specific and then if you could capture a ranking for a high volume product, then you'd be acquiring a lot of customers at a low cost, and you'd be able to continue to drive your business and grow it.

Where what you're talking about it's kind of the increasing sophistication. I think a little bit of a consumer when they're like, "Well, I'm going to search for something and then I'm going to find the best price version of what I'm searching for." That makes it challenging for a company that is SEO or Google Shopping-based because there's other competitors who might just lower their prices.

Drew Sanocki: Right. So you can compete on price, you can compete on service. That's sort of like, well Zappos sold a commodity product and they were able to compete on service. Right? Or at least grow. I don't think they ever were profitable. So that's an added challenge.

You know, I think operationally we couldn't do what Zappos is doing largely because for us it doesn't make sense to take a whole lot of inventory. It's really a long-tail business. If you think about automotive, there's a zillion year make models of cars out there. And so even our top-selling SKU, which would be the logical choice to inventory, is only doing a couple thousand bucks a year, right? Because it's specific to one year make model.

And so it makes it hard to take inventory bets and if you can't take inventory bets, then everything from pricing to the operational model is hard to innovate around. So it's just one of the things we're kind of working through now.

Andrew Foxwell: It causes me to want to shift gears slightly to hear you talking about that. But I do want to comment on it a little bit, which is that I feel that it's very common in ecommerce businesses to continue to push on the customer acquisition lever and not actually look at the core problem or problems.

Many of which is very basic, which is what is your product look like in the photos? If you're selling an ecommerce product or like how is it actually presented?

There's a company we work with that had a security camera and their photos, it looked like a plastic security camera. I mean that's what it is but it didn't represent that it was something greater or it didn't represent the overarching issue it solved.

And that's really where I see so much opportunity that you don't independently look at things or you don't have someone independently look at things of what does it actually look like from an acquisition standpoint all the way through becoming a customer and becoming a long time customer.

Drew Sanocki: Yeah. Well, merchandising is the best kind of marketing you can do. I think all of us that listen to the podcast, everybody in ecom... I mean we're all marketers, right? And we think about customer acquisition and optimizing an ad and optimizing an email campaign. But the reality is if the product sucks or if it's not presented correctly, then it's an uphill battle. And so I think I totally agree with you. For us here, it's been eyeopening just how much of the businesses is dictated by merchandising and not marketing.

In other words, we need the right product on the site. It needs to be presented well. That really moves the needle for us. If we can negotiate an exclusive product or an exclusive version of the colorway of a product, that alone probably beats any lifecycle campaign we're going to run on that product.

Unfortunately, because I love that other stuff. But the past year has really educated me and shown me the value of having that strong merchandising function at a company like this.

Austin Brawner: Well I think it ties into Andrew and I recorded an episode where we talked about the things that we learned over the last 12 months, and one of the things that I learned or that I kind of reiterated is that I feel like going forward in 2020, new decade, one of the things that I am excited about is that there's an opportunity to build businesses... When you do have the right fit for a product to build a business a lot faster than you've ever been able to do it before.

I have seen consistently over the last year, businesses that create something really innovative and cool. The market is so big and your ability to target people is so much more sophisticated than it was three to five years ago that you can grow insanely fast if you have the right product, the right fit and you're marketing it correctly. That was one of the things that I'm kind of excited about for this next year.

I'd love to hear some of the thoughts about maybe things that you learned over the last year or things you're excited about in 2020 as we kind of enter this new... I mean it's crazy. It's a new decade.

Drew Sanocki: Yeah. I think what you're talking about is if you can identify the right product and get that product market fit, that's one thing you do see in the ecommerce that you don't see in software and a couple of other categories. But you can get that rocket ship growth. I had the William Painter guy in my office the other day and they grew that company incredibly fast. You know William Painter? Their sunglasses. They built them off of YouTube ads.

Austin Brawner: Cool.

Drew Sanocki: Yeah. So something like that is exciting. I think for me personally, it's a little outside my wheelhouse because I think you need to have the right idea and be thinking about product a lot.

I think for me what I see is the quickest way to grow a company is, is through M&A. And so for me looking into next year it's going to be about mergers and acquisitions. What deals, partnerships, mergers, acquisitions can we make to grow? And I would say both companies we've talked about today. To grow AutoAnything and to grow PostPilot.

And so I definitely have my M&A hat on now as the CEO here and it's probably like 80 to 90% of what I'm focused on and I'm just really bullish on it. So it's exciting to me what is possible next year by focusing on mergers and acquisitions.

Andrew Foxwell: When you think about that, do you think that there's more value in keeping the brand that you acquire separate or having it be under AutoAnything or PostPilot?

The reason I ask, because I feel like some of these brands have such powerful niche audiences. The idea is they do so well to those audiences that to have it be under that brand is going to help.

But then I see an acquisition that happens with a smaller ecommerce company. I've seen two this year I've been really close to and they have kept that brand separate and I think it's actually ended up hurting the bigger brand because the smaller brand is actually more innovative and crushing it and the parent company is slower to react and things like that. I don't know. How do you think about that?

Drew Sanocki: Are you talking about merging brands or operating teams?

Andrew Foxwell: I'm talking about if you acquire a company. If you're acquiring a company.

Drew Sanocki: At AutoAnything I think we've got a customer acquisition challenge. And so there are a number of content companies for example, that don't have that. Right? That if I were to acquire, merge, figure out a partnership deal with a content company in the space that in many ways could solve some customer acquisition issues.

That's something you wouldn't want to rebrand the content company just because you'd want to keep it... Casper bought a one of the mattress review sites, right? They're going to keep that as a separate entity and they're not going to call it Casper mattress reviews. So that's kind of how I'm thinking about on the acquisition side.

We've also got dropshipping challenges where it would be nice to acquire product companies, right? That instead of selling products at 30% gross margin, you sell it at 70% gross margin. So in certain categories we're looking at acquiring product companies and I think the DNA of those companies is so different from the DNA of our company. Our company's about sales, marketing, dropshipping. You buy a product company, it's about product innovation, sourcing that I probably would just keep it as a separate operating team and you get synergies on the marketing and the finance side.

So I think the way I'm thinking about mergers and acquisitions is not buying other retailers really as much as some complimentary things that solve some of our growth issues.

Austin Brawner: Maybe it'd be something as simple as if you could acquire Jay Leno, his whole brand. Everything.

Drew Sanocki: Jay Leno's Garage?

Austin Brawner: Well, yeah. Or just the content side. Right? Because the dude creates a lot of content and that's a great way... I know he's got his own Jay Leno's Garage and what they're doing there, but it's on a smaller scale. And if it's like, "Okay, Jay is just creating insane amounts of content and it's driving all back to AutoAnything, that's a great strategic... I'm just picturing buying Jay Leno's brain as an acquisition.

Drew Sanocki: Yeah, I doubt he's for sale, but that's kind of how I'm thinking about it is there's just a lot of properties where there's natural partnerships. I mean, it could be a joint venture with a group, a content group, or it could be a straight up acquisition or a merger. But I would say 90% of my time now is spent thinking through some of these deals in strategic partnerships. And talking to lenders and capital to put them together. Whereas I would say a year ago was like 90% of my time was the team and operating this thing efficiently. But now it's definitely deals and a capital raise and things like that.

Austin Brawner: What does that actually look like? That's where I feel like I have a massive blind spot around that side of it. I just don't have the experience.

Drew Sanocki: We all do. I think everybody does. Yeah. Because we learn marketing from blogs and podcasts and we're all bootstrappers and we're focused on our business and we look at our competition as competition. We don't look at is acquisition targets. Nobody ever does.

But I think you get people who come from investment banking or private equity and that's how they think and it's been a nice evolution in my toolbox and sort of skill as a CEO to kind of think about that more.

Because that's where a lot of values... I think even their first deal. But I would also say true wealth, intergenerational wealth, you either got to get that rocketship product or you need multiple acquisitions and exits and I think that's also the thinking, right? It's like can you put together more and more deals to grow your retailer to grow your own properties. Right?

Andrew Foxwell: Austin, it makes me think of when we had Shakil on earlier this year on the podcast and he went and got an-

Drew Sanocki: Shaq?

Austin Brawner: Shaq, yes. Shaquille O'Neal.

Andrew Foxwell: Shaquille O'Neal. Excuse me, I think it's DJ Shaq. Did you know that? That that's like what he does now. He came actually for the American Family Insurance Golf Classic and played quote unquote the golf tournament as DJ Shaq, which is just awesome.

Anyway, back to the originalShakil who was on the podcast earlier, we'll link in the show notes, this year. He got an SBA loan and then he acquired... Or he started a company and then he got an SBA loan and acquired another company and he had acquired, what was it Austin? Seven companies?

Austin Brawner: Between seven and twelve, yeah.

Drew Sanocki: That's the play, man. That's the play.

Andrew Foxwell: And he was like, "I don't understand like why more people aren't doing this ecommerce." Incredibly smart guy and he had grown that way and it was a really big part of the strategy for him and he had a huge diverse set of businesses that he was running. And I mean Austin, what Drew's saying is totally in line with that I feel like.

Drew Sanocki: No doubt I would start there if I were starting today. And I mean I'm there today, but if this were 20 years ago, it's easier than you think to get a small business loan.

Well, I mean the first thing is okay, just get your head around the concept of buying a company. Typically, is much better than bootstrapping something. We all fixate on these bootstrapped stories Blenders that have the huge exits, but realistically for the average person buying a company is better than starting something because you can buy something with revenue and customers, you can pay yourself, for a number of reasons. You've already got product market fit. It's usually better to buy something than to build it.

And then probably what Shakil has done is okay, it's easier than you think to buy several and to not use your own money. So that's the other wrinkle that it sounds like he's figured out. But it's a great skill set if you can engineer deals without a lot of your own capital.

Austin Brawner: Well I think a couple of things that are really interesting about that. One, it's a guy named Nathan Barry. He's the CEO of ConvertKit up in Boise. Really interesting guy. He's also kind of a prolific content creator and he posted something fairly recently. I think it was on Reddit or on Twitter. I'm not sure exactly where it was.

It was about things he's learned about wealth creation. And one of those things was he talked about the evolution of growing a business, right? And what you need to learn and initially it was you need to break time from money. That's the first thing you need to learn. You can disassociate the amount of time you put in, the amount of money you make. That's the first step.

And then he went through the evolution of okay, well a natural next step with that is running some sort of an agency. If you're running an agency, that's the next step off of just being like a freelancer. Then it's moving to productize services and then going from productized services up to products.

And products a lot more scalable. But there's also a lot of challenges that come with running products versus an agency. An agency, a lot of the stuff that you are doing since it's soft skills, you don't have to have the product perfect. You can kind of get by with people working their hardest and that sort of working their best and having good intentions.

And as you move up that chain, right, you continually have to learn all the lessons from whatever's below you. So to have a successful product business, you need to understand the same challenges that an agency has understood.

And when I look at bootstrapping versus raising capital or acquiring companies, I feel like bootstrapping on that spectrum, bootstrapping allows you to start a company and learn things without a lot of risk because you can't fire yourself into the ground that hard if you don't have that much capital and when you see these crazy failures that we've seen a lot recently. The WeWork example or many others. When you have that much capital, you can throw yourself into the ground really, really in a spectacular fashion.

But if you've gone through the bootstrapping process and built a business before, you're going to have a little bit more experience and it makes a lot more sense to buy a business or raise capital once you have that experience because you're not as concerned about making really dumb decisions with a lot of money behind you. And also, it's like why spend so much time bootstrapping when you know what needs to be done and you have a good feeling and you can accelerate that process of creating wealth.

Drew Sanocki: Yeah, I think I can boil that down to just confidence, right? I think bootstrapping gives you the confidence and probably self-reliance. All of us as entrepreneurs, we've bootstrapped. We've built up confidence in ourselves. We feel like, "Okay, you put me in a room with a computer and I can figure out how to make money". That's a nice thing.

But sooner or later I think you probably become frustrated with arithmetic growth. That you can optimize the heck out of your business. What's the best you can do double over the next year? You want geometric growth and I think as the ultimate return on your personal time in something and I think that leads you down that path to acquisition. And so that's just kind of where I've ended up. But I probably, as much as I said I would've started here 20 years ago, you're right Austin. I think bootstrapping was a good step that kind of built up my own confidence in my ability.

Austin Brawner: Sure. Well you shared a good book with me six months ago, The Silicon Valley Fallacy, which was an interesting guy's take on wealth creation outside of Silicon Valley or New York. Outside of the major cities. How do you, like you mentioned this earlier, acquire and exit multiple companies over time is a... Six exits over 25 years is probably the same as one big exit and so it's an interesting way to think about it and think about wealth creation outside of what you talked about, which is finding a perfect product and rocketship growth.

Which is I think in many ways it's so challenging because you may think you have a product. How many people that are listening to this podcast right now think they have a product that is going to create rocketship growth and I know only 2% of those, or 2 to 5% of those are actually going to reach the hundred million dollar mark.

Drew Sanocki: Right. Right.

Andrew Foxwell: You're listening to the Rocketship Growth Podcast. I just wanted to say that.

Drew Sanocki: Caught me off guard. I was like, "What was that?"

Andrew Foxwell: I agree completely.

Austin Brawner: It did. It caught me off guard, too. I literally thought that was a promo or something.

Drew Sanocki: Commercial break.

Andrew Foxwell: Yeah, exactly. This is sponsored by AutoAnything. Your place for anything auto.

Yeah. I completely agree with everything that you guys are saying because it's a competence thing. It's an understanding of where you sit and also what the expectation is. And also Drew hearing you talk about it makes me think about how many people I've spoken to in the last year that are not reasonable about what they can actually expect.

They're just not reasonable about revenue that can be raised. Not reasonable about the number of things they can accomplish. And I don't want to tamper things down, but I want to say there's different routes to get to that than what you currently have in front of you. You know what I mean? And anyway. Yeah. So...

Austin Brawner: Yeah. Well this has been freaking awesome. I love talking about this stuff. Yeah, it's really awesome. It's really interesting and I know we want to be respectful of your time because you got to go... I mean, I know it's early on the West Coast in La Jolla. You've already gone for multiple surf sessions, cold plunges, at this point, you're probably ready to get into the office after a four hour prep session.

Drew Sanocki: Yeah, I should probably head in.

Austin Brawner: No, no, but seriously, thanks for hopping on and chatting.

Drew Sanocki: Yeah, sure man. I always love talking about this stuff. I would say try a PostPilot and let me know what you think.

Austin Brawner: Yeah, 100%. Cool. And you've also got, for people who aren't that familiar with you, nerdmarketing.com is your blog podcast.

Drew Sanocki: Correct. That's my calling card.

Austin Brawner: Pretty hyped on Instagram for a little bit. Is that still in the...

Drew Sanocki: Yeah, I pushed on it and then I slacked off again, but I was like, "What am I doing here?"

Austin Brawner: Well, I don't know. I liked it. I liked it. I liked it so we'll put a link to Drew's Instagram. You can follow over there. He's got some pretty funny posts and also some stuff that's not just all humor. There's a lot of good tip in there.

Drew Sanocki: Nice. Well, I appreciate it. Thanks.

Austin Brawner: Hey guys. It's Austin and if you've been loving the podcast, you got to go check out brandgrowthexperts.com. That's where I work one on one with my clients to help them build faster, growing more profitable online stores. I've got coaching programs and workshops that we host all over the world.

Would love to have you come check it out. If you are a fast growing ecommerce business or you want to be a fast growing ecommerce business, you got to check it out. That's the spot for you.

We go more in depth than we do in the podcast with comprehensive trainings and coaching to help you scale up. Check it out. Brandgrowthexperts.com. See you there.

Austin Brawner: What's up everybody? Welcome back to another episode of the Ecommerce Influence podcast. My name is Austin Brawner.

Andrew Foxwell: And I'm Andrew Foxwell and we have a returning guest today. One of my favorite people in the industry, Drew Sanocki.

Austin Brawner: 

Form Image

33 Tools & Apps The Fastest-Growing Brands Are Using Right Now

Enter your email to access this list of killer tools for scaling up your ecommerce business

Please enter a valid name and email