icon-folder-black Entrepreneurship Dropshipping Facebook Advertising

Alex Fedotoff - Acquisitions, Exits and Scaling

icon-calendar 2021-09-23 | icon-microphone 56m 15s Listening Time | icon-user Joseph Ianni

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Alex Fedotoff has the distinction of being the first person I saw through a YouTube paid ad before coming on the show. It's a small example of my unique experience being on both ends. In our discussion we dig in to some key lessons important to learn if you plan on scaling into the 7-8 figure range, he puts it best but I'll say it here; your product is your brand.



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[00:00:00] Alex Fedotoff: You know, we put people together in the inside of our community, among of like seven, eight figure sellers. So then people see what is possible, and I think that expands the thinking, so environment has a crucial role in kind of like how successful the person can become. If your environment is not necessarily productive, you have to change your environment.

[00:00:25] Joseph: You're listening to Ecomonics, a Debutify podcast. Your resource for one of the kind of insights into the world of e-commerce and business in the modern age. This is Joseph. I'll be presenting a wealth of industry knowledge from interviews, with successful business people and our own state-of-the-art research. Your time is valuable. So let's go.

Alex Fedotoff has the distinction of being the first person I saw through a YouTube paid ad before he joined us on the show. It's a small example of my unique experience being on both ends. In our discussion, we dig into some key lessons, important to learn if you plan on scaling into the seven and eight figure range. He puts it best, but I'll say it here. Your product is your brand. 

Alex Fedotoff it is good to have it here in Ecomonics. Uh, how you doing today? How you feeling? 

[00:01:19] Alex Fedotoff: Good. Thank you so much for hosting. 

[00:01:22] Joseph: You're welcome so much. It's great to have you here. And, uh, this is an Ecomonics first, so to my audience, just so they understand what, what usually happens is, you know, I get some time to look into my guests, so I have some information going in.

And over the last year, I've accumulated a lot of subscriptions. All people in the e-commerce base, we've got the Amazon people, the Google people, some programmers and stuff like that. So my algorithm is razor focused on like other e-com ads. And that's where I first saw you. You were running, uh, in an e-commerce ad as well.

And I actually took your name, Alex Fedotoff. We gotta get this guy in the program. And I don't know if that's actually how we ended up having you or if it was a coincidence, but either way it's, it's great to have you. And I did want to ask you about that, just not yet. First, I have an opening question for you, which is to tell us what do you do and what are you up to these days?

[00:02:12] Alex Fedotoff: So, yeah, um, our business, uh, we, we pretty much strong like business. It was like, kinda like has two main divisions. One is, uh, e-commerce business. So we operate, uh, several brands, um, upgrades, uh, like most of them the drop shipping model. So we dropped ship China. It was good experience, uh, was good shipping times. Our customers are happy. Uh, so that's one line of our business. Um, bigger one and a smaller one is our, uh, consulting business. So we have like a community, like a mastermind of people who pretty much learned it from each other and, um, kind of like how everyone draws business. 

[00:02:52] Joseph: And w so with the, with the drop shipping, um, are these products that you're currently working on for yourself or is it also, uh, you working with clients and helping them, uh, drop ship their products?

[00:03:02] Alex Fedotoff: So these are all in our own projects. Um, what we also do these days is, um, for example, we might work with the client and then if their business is doing well, let's send their business doing like seven figures and my expertise and what I'm, what I'm doing. Like, that's kind of like my core expertise probably is thinking businesses that are like a seven figure range. Taking them to eight figure level. Um, and so that's what our team is good at. So with some of these businesses, we partner up. We helped them to go from like seven to eight figures. And then we help them to successfully exit that business. And everyone wins. 

[00:03:38] Joseph: The other day, I was, uh, I was explaining to my partner, just the, just to quantify the difference between say, being like a five figure or a six figure six figure to seven figure.

And you, you know, you think like, you know, the minimum to be six-figure, you know, like a hundred thousand and you can have 10 of those versus one person who is the minimum for seven figure. And then the same thing happens a seven-figure eight-figure. In your experience, what would you say has been, what would you say is the most, I guess, substantive or maybe the most shocking, really the most difficult to, um, to really fully get a grip on the difference between going from six figures to seven figure seven, figure to eight, figure eight, figure nine figure if that's come up.

[00:04:19] Alex Fedotoff: Uh, basically what kind of like the main, like difference. 

[00:04:25] Joseph: I I'd like to hear well, if you can share a perspective of the people you've worked with, I'd love to hear that to your own perspective. I'd like to hear that. And, you know, even the mindset of just what is the, the qualifying difference between the person who makes it from that from five to six, six to 7, 7, 8.

[00:04:42] Alex Fedotoff: Very good question. Because businesses are us, right? Like, you know, the, the quality of business typically depends on quality of the person. Uh, that runs that business. And, um, for sure, like, I mean, that has a big impact. What I have noticed. Um, I bought like our most successful because we have, for example, some of our clients, some of our students, they're doing eight figures in sales, um, like 1.5, $2 million per month in sales.

So pretty like, I mean, decent businesses and well-organized um, so for those types of people, what I have noticed is that they are very hungry for knowledge, and also like, but you can be hungry for knowledge and you can, for example, was it podcasts like you have tremendous guests on your podcast, but the difference between people that are successful, people that are not necessarily that successful is the actual execution.

So you might learn some like principles from the podcast and like taking that idea and actually implementing. That actually gets the results, right? Because everyone housing access to the information and what I have noticed on this, particularly once be like big difference maker, like in our community is that um, you know, like people we put, you know, we put people together inside of our community and model of like seven, eight figure sellers. So then people see what is possible. And I think that expands the sinking. So environment has like crucial role in kind of like how successful the person can become. So that's kind of like a sink in factor that people have to take into consideration.

So if your environment is not necessarily productive, You have to change your environment. If you, if you need to relocate, you need to relocate. For example, I'm from Ukraine and I had to relocate my last two years I've relocated several countries. Now we're in Miami, Florida in the United States, um, and kind of like constantly relocating cause you're looking for a better environment, better people to surround yourself with.

Because that will predicate your growth. You will see those people. Now you're inspired. Now you like, you see some ideas, you actually believe that it is possible because you have seen people that might be younger than you, but hungered than you and actually executing those ideas, getting them done and achieving great success.

So I think that, um, these are like big factors are in, in, in the successful. 

[00:07:23] Joseph: I've I've, uh, I I've talked to a number of people so far who, yeah, they're, you know, they just got into their twenties 21, 22, and they own their own homes. I recognize that, you know, any, any podcasts can only go so far, uh, especially when you only have an hour.

And that's also why, you know, with my line of questioning, I asked big questions. I ask small questions, but I find the more granular they are, the better off a person is just like going on to your YouTube. Getting the most up-to-date videos, um, because things can change pretty rapidly as I'm sure you're aware of, you know, doing Facebook advertising and seeing just how many things can change drastically on a, on a regular basis.

Now, I actually wanted to ask you about Miami. I was, I was planning on asking you about this later, but you brought it up. My, my girlfriend and I, we we've actually talked about moving to the states because, um, we're not having, we're not too pleased with how things are going in Canada right now. And, uh, and Miami, Florida is like one of the main contenders because it is a plus coastal city.

So being in Toronto, we're kind of used to that. Uh, but it's also densely populated. So there's going to be buses and stuff like that. But like, what was it about Miami that drew you to, to there of all the places you have the luxury of going to. 

[00:08:30] Alex Fedotoff: For sure. So, um, I mean I'm from Ukraine and it is like extremely challenging to just like, get Visa to like United States.

For example, it took me like five years. So the obstacles that people, for example, you know, leave in one developed countries, they wouldn't even know about those obstacles. Um, but I think that's, you know, that's good that I have to overcome them. Um, in Miami, like generally I sank it just the. Uh, I mean, the climate we've lived in Europe and it was pretty like gloomy.

So we didn't want to see that. Um, also the, um, I knew some very good entrepreneurs and we'd hear, so I assumed that they chose, they had chosen this place. The way of that is probably a good place to live. And it wasn't a right assumption because like, Tremendous like the flux, very good to people entrepreneurs or even from other states in the United States, because it's open, everything's open, like I never seen.

And, um, it just a good place to be. And, um, but it generally kind of like the mindset that I would have. What is a better environment. So for example, we'll leave tomorrow. Something changes in like, I don't know, Colorado, and it comes to a better place where received there, like the opportunity, the environment to grow our business.

I've chocked amazing balance. Then we'll just relocate there. So we're not like all of the other things we just got because that's only what matters. Like if you want to succeed in life, you have to make some sacrifices. You have to make some choices. Um, and I think that is. Yeah, that's one of the reasons why we moved here.

[00:10:06] Joseph: One more question. I wanted to touch on this and then I want to go back to that YouTube ad that I chambered earlier is, cause I know you're also, um, you know, you're also a father too, so, you know, you have to factor in how this, uh, how this impacts your family on top of all this other stuff. For, for anybody who may end up in this situation, down the line, if not already, how would, how did that come into the equation.

[00:10:27] Alex Fedotoff: For sure. So, um, yeah, it was, was our kid, which we changed several countries. Um, when, when our, when our kid was, were burned, like we, we changed through conscious already, uh, even before coming here. So he had exposure to different environments. And, um, so whether we came here. Like my, my thinking is as an entrepreneur, I think you have to prioritize.

The business, um, I mean kind of like three or at least give yourself eight, 10 hours of focused work a day, because that would allow you to kind of produce for your family and duress, like, so you produce, and then you can afford like different things. And for many you can afford and good schools for. Um, and we have organized life in a way where it's like, um, we wake up in the morning, we take kids to be, uh, to the school.

Then he, uh, after that. So we have like a proper, like nine, 10 hours of work that we can get done a day. Um, and then obviously, like we can a kid, but we have organized life in a way where it's like, um, we can spend a time with kid focused time in the morning.

But also we can get some work done, um, and also organizing the whole life. Anyway, if you can work from home. That's awesome. Um, we couldn't because it was the noisy. And, um, so we, we have an office which is very close to where relief. So office like that minutes walk, um, then the kindergarten sculptural penguins walks.

So everything is close by everything's walking distance. We don't even need a car. We don't need to commute, which saves a lot of time. And I say those types of saints organizing, optimizing everything in your environment, so you can actually get stuff done. I think. 

[00:12:19] Joseph: Yeah, and it, and it's really one of the most attractive things about being in a, uh, being in a densely populated, urban setting, everything being within walking distance.

And, and there was, there were stigmas to that. Um, I mean, not that very much positive came out of the, the, the pandemic, but I think one positive that came out of it for sure is the respect for a remote lifestyle and for, um, uh, being, being in a situation where everything is a lot more closer and a lot more convenient cost, a little bit more money, but. So does it having a car. 

All right. So here's my question about the, the ad, like I said too, before my YouTube algorithm is, uh, highly focused and so naturally I was targeted for it, but the, the thing that I, that struck me as I'm not, not, not confused or anything, but certainly a curious question is that, you know, those ads.

They, they will reach out to people, I think in the more entry-level position. Um, I, I don't necessarily think that, I mean, it's possible that it reaches the people who were in the six figure range, seven figure range. They use YouTube too. But I would say that for the large part, it's a lot of entry-level people.

So tell us about the, this ad that you were running, like, what you were expecting out of it, maybe some of the results you did get out of it and you know, what was your mission that you're trying to accomplish with it? 

[00:13:34] Alex Fedotoff: For sure.

I mean overall, like our goal was in like five years we'll own like a private firm and acquire, uh, consolidate and aggregate e-commerce companies. So what we're doing now is pretty much you're building this foundation for it. So all of the people in our community, so mostly their dropshippers. But it's just a matter of time when, uh, all these people just evolve into brands, available to brands they're long into brands.

So we'll be consolidating and buying brands for our clients. We'll be helping them to grow with our training platform. Um, and that. Uh, once, you know, there are certain level we'll be acquiring there, we've talked in our optimism and then we'll be helping them to, you know, leading them to the opposite.

So, um, the philosophy kind of like the funnel that, that our ads, um, are using this pretty much getting people into our ecosystem. Right. We don't need like people that are just starting out. I mean, they start, we didn't need them, but we can not help them as much as we can help for example, six, seven figure.

We definitely have some of the people who are just starting out. Um, but then we have the qualifying questions. So when people, for example, apply for a phone call would have the qualifying question. If we cannot help them, unfortunately would have to say no. And we will recommend certain like, sorta like services that they could use to get their businesses certain level.

And after that we can collaborate and we can help them to grow to the next level. So, um, yeah, are market is like six seven figure , um, entrepreneurs, eCommerce entrepreneurs. Uh, this is just kind of like based on the data that we have kind of like the, the results that we have been able to, uh, our clients to achieve or to help our clients achieve.

And so that's market that we're focusing. 

[00:15:21] Joseph: And then in regards to drop shipping, um, I it's, it's encouraging to hear, uh, how important of a component it is to your business. We've got on this show, we've gotten every opinion possible on drop shipping. We've said some people don't, don't go into the states is saturated, uh, sell to these countries.

We've had some people say don't sell that. Don't do them. Don't do it. Uh, we've had, we've had, we've had everything. So I want to get your, your take on, on, on drop shipping and. You know, as, as people are coming to, uh, into your ecosystem, as you say, they're in the six-figure range, is there any trends or patterns you're noticing like certain niches right now are working access with exceedingly well, um, the brand that they're associating with it that is along those lines.

[00:16:02] Alex Fedotoff: Um, what we're seeing is that generally, you know, darn so the saturation I send you just a. Like every market. Like if you have, like, if there is a market was a boat barrier, frenzy is a matter of time that a lot of people will get into it. It just, it's just natural. And, um, so it's just happening and we okays that, like with the clients that we have.

A lot of them are knowledge. We get a lot like more and more clients that actually run like a brands and they're on brands. But like for example, having a drop shipping store versus like a brand. You can have a brand, which is like, which would have like, um, very good customer experience, but at the same time, it might be, um, struggling to generate sales where you might have like a drop shipping business that is very successful.

So I seen the success of the business as young of days for the cadence, how successful it is in terms of the sales. Um, and there are definitely, I wouldn't say the drop shipping is saturated as is. It is getting more challenging because Facebook is, um, kind of. You know, dropshippers, spawning all of these ways.

And in our business, we have developed the systems with, at a comms whose pages was brought file. So we can advertise continuously, uh, even if something gets banned. We have multiple sources from the agency accounts, which are, which are not getting banned as easily. So we have all of these resources that help us to kind of like maintain the volume that we want to have.

But at the same time it is, yeah. We see that kind of like trend where it's like, it's just getting more and more difficult. And in terms of the enterprise value of the company that. Um, if there is a drop shipping element, we, we are losing on that. We are losing on that, right? Like we, if we would have, for example, fully any products, uh, shipping from United States, fast shipping, um, we, we have still a decent shipping, but not as, as good as it can be.

So in that respect, we are losing probably like some interface values, with the brand, uh, you know, the, the, our portfolio of companies at this particular moment. So it's kind of like dropshipping is amazing training ground because you didn't have to, like, for example, Like just start with blocking the door for a hundred thousand dollars right then, and then just hope that like that inventory will sell.

So I think drop shipping as a business model is great for validating different ideas, but what's important is that to evolve. So one of the priorities right now in our businesses to products that we sell to improve these products, make them more defensible, trademark finance, um, and basically during limit to brands.

Pretty much, that's kind of like transition to make it more smooth. So we don't have to kind of like, guess what's selling, we already know what's selling it. Just like dirt, those ideas, actually something that has bigger moments, value.

[00:19:14] Joseph: As you might imagine, you know, having done this show for about a year and now I set up my own my own store. I got my own brand going. I haven't sold anything yet. And, uh, not a, I don't, I don't go that quickly, unfortunately, but for me, the, the catalyst, it really started to excite me about what this is capable of.

It wasn't the product, which I'm in the midst of, of, uh, doing my own like crash testing right now. And just making sure this thing doesn't crash. Um, but it was the brand that got me more excited about it. Let's just say this product doesn't work very possible that people move on to the next product. But the brand is something that I think is more, uh, has more inherent value.

If you have a strong affiliate system, a strong blogs, got a customer service or have to build up community around it, it, I think it elevates the, the product, um, in a way where if somebody is just depending on the drop shipping product right off the bat, then that to me that's comes across as more of a gamble.

Let me frame this in a way that I think is like a, as a question is, have you seen, um, w at your point, have you seen that it's the strength of the brand that has been carrying the product more, or the strength of the product is carrying the brand? Is there is a, is a balance between these two or is it leaning more into one or the other. 

[00:20:22] Alex Fedotoff: To some point your product is your brand, right?

Like, it's your delivery is your brand like, I mean, apple, for example, they can, they can make cars, they can make. Uh, like I don't know, sunglasses, um, taking, make, um, I don't know the tripods or the, uh, you know, for default probably I received himself to some capacity because there's a lot of value, a lot of perception that's already established for a company that's like brand new that doesn't have that awareness and that doesn't have endorsements.

I mean, it's a lot of our, I mean, you can modify that perception. You can create that perception. Um, but at the end of the day, like if, for example, your marketing is amazing, like your deal wraps that is sleek and like, well designed is very like minimalistic. It looks amazing people buying conversion rates on marketing side, everything comes to the point where people actually see the package.

First of all, how much time they're waiting for it backwards. And, um, whether they're happy with what's inside, whether they're happy was that well, There to happy. It was the packaging. How strapped was it? Wasn't damaged, usable all of the features, whether that matches means your marketing.

So if that expectation is matching, then you have something that's valuable. But, um, otherwise, um, so I was saying a lot of people perceive brands on this kind of like side of marketing. Um, it's kind of like okays it's nice logo. It's nice website. But the brand in my perception is the experience at the end of the day.

Right? So you might have some experience, but then pro quality of products is not very good then how's it better dropshipping. So that's, that's my view on that. I think at the end of the day. Yeah. It's will come down to the experiences customers have, because what's important about building, um, building brands is like one of the most important things like, so we, when we allow the businesses that we want to invest in, um, it's the repeat purchase ratio.

So if, if customers don't buy like more than one time, Like something is off, I guess maybe, maybe it could be due to the, uh, email sequences, automation, sequences, and SMS sequences. And kind of like you being offered, like you having an all in one product on the website. So people simply don't have the capacity to buy more than one.

What, if you have all of that and people were still done by right then that's experienced problem and that's needs to be right. 

[00:23:01] Joseph: And so when you're bringing businesses into the ecosystem, um, are they typically sticking to the product that they've, uh, come into it with? Or is it possible that Notre for them to scale up people are, um, switching gears, uh, going into different product lines.

[00:23:16] Alex Fedotoff: It definitely needed more than one product. Um, for sure. Like at least like, so if you have like one lane product and you see the ice promise. You definitely need like few more products just to have his off sales is uncross sales to kind of like maximize that everyone should value be more profitable, being more profitable with each transaction.

If you think about, um, any like any company like that would start, like there's a company called manscape. If you're familiar is catering specifically to man, I had the product it's amazing product. And so it's the same model. So they started to this one kind of like core product. They've added these like different gels and different kind of like creams and stuff.

So it makes like a bundle. And now if you will go to their website, they have like, so like, like many different categories now. So they have expanded from there, but that core product still maintains the same. This is what they're mostly pushing. That's what gets people into ecosystem. And all of these other products are maximum.

The lifetime value of costumers on the backend and keeping them in that. 

[00:24:22] Joseph: Well, I think manscape is, is a great example to bring up and I just pulled up the website real quick just to see like, what's the first impression that I get and yeah. And the razor is still there. They're the front runner, but very quickly you also see some of the cover, a reserver.

Um, okay. Well, I'm not saying that word out loud, but then there's also a deodorant here too. 

[00:24:42] Alex Fedotoff: They have these. Like, few. Like I bought the version 3.0, now it's 4.0. And in probably a few months, or like in a year from now, they'll have like 5.0, which means they're constantly evolving as their product you're getting feedback from customers. So I think that is a difference between brand and, um, possibly drop shipping. So drop shipping pretty much your drop shipping something that's already existing. These guys have actually done the research, like, you know, invested in research and development, creating a better version of the product, making customers more happy now, even people that probably that probably also have repeat purchases, because if say you bought like three point over.

Maybe you'll decide to buy a 4.0 version of the product, or you want to buy for a friend because you had a great experience. So it's like the same as apple, right? So how does phone here? And it's like, every year they sell you new version of it. Like every year, like September, like what does a new version?

Everyone buys new version, everyone buys. So keeping people in that ecosystem and then supplying them with multiple. You don't want to get too distracted, like launching new products all the time, because at the end of the day, your core product is your core product, or you definitely need supplementary products through the supplementary products to maximize the lifetime value of each.

[00:26:05] Joseph: And what I think is also important too, is that when that, when a brand, such as manscape gets to the point where it has, uh, that many products, uh, available to it, you know, they they've gone past just trying to sell somebody on the razor. They've really tried to cultivate, I think, a more comprehensive consumer avatar.

We're now they're saying, well, this, you know, it's not just about shaving. It's also about your skincare. It's about your health routine. It's about your, your overall wellbeing. And I think that's this, this is me like learning, by the way, I I've made the mistake in the past at different projects where I came across.

Like I knew everything I don't, but what I'm, what I'm getting here is that they ha in order for them to really scale to the next level, It's not just expanding on the product, um, having these other products, it's, it continued extension of their mission and of, you know, the, the mentality that they want to impart on people.

I go to the website and, and I don't, and I think just about the razor, but then I'm thinking about all this other stuff too. And even I'm not buying any of it. And I'm like, oh, you're okay. You know what I see. They're introducing the new problems to me, they're telling me, you know, these are other things that you might not have thought about.

Something that can go wrong with your skin can go wrong with your wellbeing. Something that can affect you. You, when you come out of the shower, it's all new things to think about, which ties into the next products that they're selling. 

[00:27:18] Alex Fedotoff: A hundred percent. So, um, I saved their maximum, I mean their problem and it was that particular, maybe not my style, but probably, like, because that's kind of like the key, like the PI didn't pioneer. They pretty much dominated that each step he's kind of like, they just like overtook him and um, like now they probably kind of like this. They might've seen their sales there's a main product. So they say, okay, like, let's introduce these other categories.

Maybe we'll kind of get into all of those. And like keep dominating, like different sub categories and keep expanding. 

[00:27:59] Joseph: Okay, so the next I wanted to ask you about this. I wasn't, um, this one wasn't on my, uh, on my list, but you, you know, you mentioned, um, the part of the exiting process and I don't get to ask too many people about the exit.

In fact, I think I've only talked to one person so far about exit, so very broad strokes. What is it? Um, Uh, business is doing to be actually no more than one person. I talked to a brokerage. So what is it that a business is doing to get this off, ready for exit? Um, and are the, are there certain things that a business wants to do from the very beginning from day one that they want to keep in mind if exiting is their end goal, which it often is amazing question.

Thank you. I worked hard on them. 

[00:28:40] Alex Fedotoff: Okay. Uh, so amazing question. And actually like today, um, I have received a message from one of my brokers, so, um, I have brokers and clients join. Our training class, our mastermind, and we help them to grow clients. We help them scribble specific areas of their business, whether that's advertising, whether it's definitely email marketing.

So we refer them to like the different resources. We've kind of left field, these gaps that they have in their business and how this like amazing client, um, and his he's like 20, 20, 21 years old, very young. And. 

[00:29:20] Joseph: Uh, it makes me cry to hear 

[00:29:21] Alex Fedotoff: that. Yeah. He's he has gone, like, he has gone like very successful business selling a particular product.

He's been growing the business from like 2019 to like three years now. And, um, first year he's bottled, like, I guess like $2 million in sales, which is pretty, pretty decent. Yeah, the second here he has done their last year. He's not like a formula in dollars in sales and he can generate $1.2 million in profit.

So like he reaches out to me and I might just thinking about selling the business. Okay. Sure. I connected him with my resources. And so I could ask him as my resources, one of my, one of my brokers, like how do I guided him through that process? Which I'll explain the second one. That was, I just sent me.

You have to, they, we have listed the buses. And the businesses like four or $4.5 million for a young kid. I mean, that's pretty nice, like accent, if they'll be able to pull through, like, that's pretty good. Um, pretty good starting point, um, for $4 million. That is dropshipping. So just to give you context, this is drop shipping business, right?

If you go to Ali express, you'll be able to source exactly the same product. So that's where the context. So what, what made that business actually successful and sellable was two factors. Like, so first of all, people actually having a product, even those jobs, even though it's coming from China, even though it's like passporting days, people have to wait for a product.

People are happy as a product, you got to go to, people happy. Hey, I'm so happy with this product, how people to do business. Um, so having people natural posters. Yeah. I think that is probably number one, same, because if you kind of like, these are people and you're trying to push that, like those products, like, you know, it's, it's not, it's not good.

You know, it's like a good experience and it's, you know, your seller is a buyer is sophisticated. They'll quickly figure that out. It broke ourselves sophisticated. I mean, they wouldn't even like. Kind of like being like, you know, aligned was a business or being participate, like participating in south in selling the business.

So, um, that is number one, just the customer satisfaction. Second purchase ratio. So customer your satisfaction on the product has sells as consumables. So you use it for some time, then you need another one. So second repeat versus ratio. There's a percentage of people that every single, um, you know, like month or every few months, because they need more of it.

It's more, more and more and more. So that is a second factor. Third. And that will specifically be, uh, like he, I talked to the broker that represents him and he said, okay, so your job should be now a lot of the people can go to like Ali express dropshipping exactly same products. He guided him through.

Great. The licensing agreement was his supplier was the factored, the supplies, him, the products. Okay. So we have the arrangement. We are, you know, we have nothing like you can sell products on their own brand ever since is kind of like on paper, every single legitimate. So for the buyer who buys this business, I mean, they can just take over and then they can have peace of mind that like tomorrow, maybe factory like decides, Hey, we don't want this seller selling our product anymore.

Let's shut them down. So that was the third factor and forties. Um, you know, he reached out to me like one month ago he was very business. Every, every process, um, in this business, like, was documented like, okay, so how do, how does, how did he manage the ass on a daily basis? Okay. How he communicates with supplier, how he does, uh, he's like video editing, how his sources of content for his ads, how he manages the websites, what kind of.

Since he changes some new assets from time to time. So kind of like all of those things he has streamlined. Um, and the interesting thing about this business, do you know how many employees this guy has? Can I guess, yeah. I, yes. 16. 

[00:33:48] Joseph: One. 

Okay. All right. I could have been, it could have been a lot further off. 

[00:33:55] Alex Fedotoff: So yeah, like why don't we, so he has like one person like in India or Pakistan.

And the person helps things like video editing, probably customer support. Um, and this, this is it. He has a supplier. So he works with his supplier. She has his, um, client, um, you know, kind of like that, that support person that helps him out. And this is it. So over windowsill, over half, like margins are like extremely high and he would mind, he manages all of his.

He uses the email marketing agency. So I recommended like the email marketing agency that he's using that generates extra sales for him on the backend of his business. And pretty much, you know, that is like very like simple example. So it's kind of like, Like it's, it's a brand in a way it's a brand, but it's like drop shipping kind of like, you know, so it's kind of like a hybrid.

So this is how I see it. If you're doing it right, you can do something sellable maybe to not have like some crazy, crazy, multiple, like some of these businesses sell for it, but you can still get a, do treat, acts multiple in profit from such business, which could mean a pretty significant, yeah. 

[00:35:06] Joseph: So great answer.

Uh, I have to remember to say that more often because people say great question. I'm always have, but I never say great answer. So customer satisfaction, um, repeat purchase, ease of transition and documentation that I, I wrote them down just wanted to make sure right. Those for. 

[00:35:22] Alex Fedotoff: Um, what was the licensing agreement?

If you drop shipping, make sure you have a licensing agreement. Or if that's your brand, that's trademarks and patents. Okay. You ha you selling the business. Now someone comes to Maura, like they have big budgets, they launch a product and your category, they read like all of your landing pages, all of your ads, they just scaled the product, the Bush, you out of auctions, you're out of business.

If a buyer is, is, you know, considering business, like those are the same. The gold is mine. My, can I lose mine on this transaction? What is the risk I'm taking here.

[00:36:01] Joseph: By the way, if you're a current user of Debutify or haven't tried us out yet, Debutify version three has been released and now is a good time to upgrade or get started as any. A streamlined user interface along with an ever increasing array of conversion boosting add ons is waiting for you. So download today for free and start your journey. Who knows, maybe I'll be interviewing you before too long.

So we, we, so we talked about what is ready for the exit and a lot of this. These are things that really sound like they, you would want to have this, even from day one, especially documentation early on, right from the beginning, start to document it. This is, these are my costs. These are the tasks. And so on.

Would you say that there are these four factors are the most significant ones in scaling a business from five to six, six to seven, seven to eight. And so. Or along the way to be fair, you know, customer satisfaction. I think it covers a lot of it, but along the way, does anything else stick out as some of the key pillars to make it to the exit?

[00:37:02] Alex Fedotoff: 100%. I mean, I think there are different, different kind of like, um, there are different things that from like, just like jump starting the business from zero versus seeing that they're required kind of like making the business sellable, because for example, this sense that we have just gotten. Um, so my, my client was suiting.

Like he didn't have, he created those in like three months and he didn't have them in the first place when he created the business. But what he had was okay, so product markets. Right. Like, so I don't know if you know this story about like PayPal when they first started. So now it's like extremely successful company.

Like Elon Musk is a genius, right? Like everyone's like worshiping him. 

[00:37:45] Joseph: I think I might know the story. I think, I think at first PayPal, they didn't have very much activity, so they were paying people to use it. Yes. 

[00:37:55] Alex Fedotoff: And they also would go like very broad, like kind of like who can use it. Oh, everyone can use it.

And then they figure it out. The E-bay power sellers. Like they would make a bottle, like they some custom coded that bottom and put into their website and they will see what fueled those people and don't process it. Boom process. A lot of things actually analyze the data. They'll see. We probably need to just scrap everything else.

This specific segment, because this is product market fit is solving a real problem. People will buy because they see something on E-bay listening and this is how they started to get traction. So product market fit. And so it applies to most brands. You know, that's why, for example, what we just bashed on earlier of like making like a hundred thousand dollars worth.

So. Tremendously beautiful packaging shipping from United States, fast shipping, gentle madness experience, like product that like you put it, you put a new list. Like when I was in Facebook ask and it doesn't sell, right. Because there's no product market fit. So everything that we send guys with entrepreneurs doesn't matter.

We might have our own like, oh, this would sell. This would sell. You know, sometimes I would seem that this would work very well. It doesn't matter. Our opinions don't matter. We are just like irrelevant because what matters is what people say, what people would buy, what people would pay for. I had a conversation just before this one today with, um, he works with DFO global.

It's a big conglomerates. Um, like they, they run multiple models, multiple offers, um, like 150 to $200 million. And is my favorite company. And she's shared with me, you know, that, uh, you know, the offers they run also, you know, some of the offers think they don't work. You know, some of the offers like you might have their opinions, uh, okay.

This offer would work, but you know, some offers just work a lot. Some, some finals that they have some bases, they would have like ugly, you know, like, oh, visually they're not as attractive, but they would convert like, You know, and so I think that's what a lot of, a lot of the times entrepreneurs kind of like miss that they focus on something that looks beautiful, but something that looks beautiful doesn't mean it will sell.

Yeah. And sometimes, you know, people would invest like five, 10, $20,000 into like custom, like websites. You guys have a tremendous team. Like, I mean, they're probably, you, you see the problem with data, like behind your sellers. It probably people like being like a. It was a two-year team is quite singled to use quest sequencing, but it's conversion optimized.

It's optimized for the results. And this is the only thing that matters at the end of the day. It's not your brand, it's not your collars. It's not like how beautiful it looks, but how action sells. So, um, which was the question.

[00:40:57] Joseph: Oh, I was just clarifying is, uh, so it was initially about what are the factors that a business should prepare for, for exit, but then what are some factors that stick out along the way?

And, uh, you mentioned quite a few. 

[00:41:10] Alex Fedotoff: And he assumes like product market fit in first place as a product sells. Whereas there, there is a big pain that product souls, because big pain, like, for example, You know, and some people started struggling or not struggling with software from like, Uh, excessive weight, right?

And they want to lose weight. Um, those people want to exercise more efficient than passive because it's time for the gym. So you have the pallet down, you have the mirror, you have all of these different states to have massive businesses. That's our community, just out of that one opportunity because people don't want to be social exposed.

So whenever there's a problem, there is a solution, right? And entrepreneurs sell the solution. You sell a drop shipping product, you're selling the solution. And the way I think about it, Problems pretty much remained the same. People want to be. People want to look. People want to feel good. Um, in, in entrepreneur, like in training, like people want to make money, right?

So this is one of the problems that we solve, um, and the much when people want to live longer. Um, and so like, there are a few kind of a core problems that they're just existing. Right. They're having like many people selling it on the posture correctors, right. That problem, like, didn't go anywhere. So fall, like if you will research, um, there's this product called upright.

But they're selling, it's an Amazon it's everywhere. The posture corrector. Yeah. Yeah. I tried one. 

[00:42:38] Joseph: Well, it's gone now because it was the one I got was like a harness and it's all Velcro based and, um, Well, I mean, my, my posture is pretty bad. Like one of my defensive techniques is to turn to my side and then a punch would go right past me.

So I was in a pretty bad situation, but the, the problem with the Velcro was that it didn't hold the tension was too much and then it would kept snapping off. So I said, all right, you know, back to plan a, which is a willpower.

Um, no, I mean, I've taken some, some classes when I was a kid, but like, nah, that's just, that's just, uh, that's, that's just my, uh, my, my self deprecating sense of humor. Oh. 

[00:43:16] Alex Fedotoff: Okay. All right. So the, so basically what I mean, they have this like two problem is the same problem is about posture, right? Uh, how's it solved it's so like not was this kind of like hardness, which is, I mean, some people like it, some people.

I was this like, beautiful, like, it looks like an apple device. It's like app, it's like white. It's good looking. Right. And it's so shiny object. It's like, oh, finally, that's a solution. Right. So people always looking for the shiny object. So you have the existing problems. If you can resolve that problem. So the problem is the jobs should be models.

Like pretty much people kind of like choose from the same pool of products. What do we do differently is that we are reaching out to our suppliers and we're asking, Hey, here's this product? Do you have like newer variations of that product? Newer, maybe it's looking like, so everyone's selling, like, let's say black, black, you know, kind of like device you would sell.

We sell like racks, we'll selling pink, who'll sell, you know, whatever collar would sell and they would ask, we would ask them. And then we just like put some ass on, which just put some stock images. We would see if that who sell that will sell. We just refund all of the orders and we would start like ordering the product and actually selling it.

But we would try to find the new solution. The old problem, and this is exactly what you need kind of like to go from death, like initial level, because you might just go like, and just, okay, so someone is successful with this ads. Let me just like copy the product. Copy of the landing pages. Copy, like all of this stuff.

The problem is that it's like, that's the same thing that like hazard, like thousand people are. And so you're placing, they asked, are we getting the same audiences? You copied pretty much the same content from YouTube. And there was no like differentiating point for any of that. So most likely, you know, most of the cases, it doesn't work where it does work is like where you have some differentiating points, whether that is product.

Um, sometimes just with your ass product might be very similar, but your outs are different where your funnel, your conversion mechanism is different. Um, but those are kind of like more advanced things that. We use, for example, in our business, I sing. They're not like they're not for everyone. I mean, even in the first place we have some, some people in our program, some students that have very, very basic websites and, um, I just had a conversation.

Um, that's exactly, that's also like one of our guys, um, he works with a company called. If you're familiar, like a challenge company, extremely successful, they're selling this like block, it could kind of like blanket that you can boot on yourself. Oh. 

[00:45:56] Joseph: Oh yeah. I seen those. Um, I think, I think they're pronounced UDI.

Um, yeah, like I said, it's like a, it's a cloak blanket where you just. 

[00:46:06] Alex Fedotoff: So that company, for example, She told me like they're like team and their website is, um, the beauty. So not even like your guide, like your guys' like paid team, like it's more than the vast more sophisticated. It is the beauty it's like, it's like free team.

Um, but anyone can get right. But because their products are different, their content is different. Their con is unique. There's a lot of there. They're killing it. So, those are kind of like the saints, you know, kind of like sinking differently. I think those saints with having to go from like, just to build a business, was that great foundation.

And I'm not even thinking about six-figure loud because if you do something like that, if you do it, try this like as minimal mess as has that seven-figure. 

[00:46:54] Joseph: You know, uh, it's, it's pretty amazing to, to think that I don't know what it is and I should really get this thought out of my head, but the idea of a product with that kind of international renown is a Shopify is like on a Shopify plan, let alone what theme is using.

Just the idea that it's a Shopify thing. And I don't know if I'm alone in this, um, or if there's like a stigma attached to the, I guess the limitations that people expect from a Shopify store. So it's just, it's just fascinating things like, you know, I walked into a Canadian tire store. There's people all over the world.

I should really clarify. It's a name of a store. I didn't just walk into a tire, at least not lately, but it's a product in a Superstore and it's available and you see in the boxes and it's just amazing to be able to create a connection between that and a tool that everybody has access to right here right now.

[00:47:40] Alex Fedotoff: Yeah, exactly. Kind of like youth or not. And e-commerce, and all of these platforms just kind of like lowered the barrier, like so low. You can just like start a business like today, like, like yesterday. I mean, it's so it's so easy. Like all of the barriers are gone. The only barrier is kind of like, it's just our imagination.

Um, it's kind of like, okay, so we are getting a business bull. We have this opportunity as much as like millions of other people. The depression is like, how do we do. 

[00:48:17] Joseph: This was a question that, um, uh, chambered in my mind, based on your last answer, and it's about how, you know, the entrepreneur really has to ask, what is the customer want?

What is the customer trying to have a problems with problems they're trying to solve? And it, and fundamentals it's about looking good, feeling good, living longer, if not achieving total immortality, which, you know, one step at a time people. And, and I think what's kind of a challenge is that me, you know, technically as an entrepreneur myself, technically I buy things too.

I'm a consumer. So what is it about, this is a speculative question, but what is it about the entrepreneur's mindset where they can't trust their own buying habits and their own position as a consumer and has, has a trusted position of other concerns. 

[00:49:02] Alex Fedotoff: I think sometimes it's, I think that's also from my side that's I seen, I seen it's like only consumers, but like sometimes you have that feeling sometimes like you have a painful problem that you facing yourself and you solve the problem, and then you figure out that other people also have the problem.

Um, but at the end of the day, yeah, it comes down to the consumers. It comes down to like what they actually want. And what options they have available, right? Like, uh, I think it wasn't a Mark Cuban book. He said, um, you know, there was like Google and like, um, rejected, like to buy Google or something that they had that opportunity to buy the deal one.

It like, so it's kind of like, it wasn't different than like 20 years ago or so, so yeah. Was like here, Google, here to starting on. Like Google Cinzano, they focused on the consumer. What's easier for the consumer. So y'all was making everything so complicated. So sophisticated Google making a single search bar, like simplify it, everything you've done.

So the search made it very like go, it's kind of a search algorithm to show a fairgrounds websites and send like Yahoo, um, kind of like the abbreviation means you'll always have, or. Oh, he's said that makes a lot of sense. You always have other options, Yahoo. You go to Google. Right. And that's what happened.

People went to Google and Yahoo is like, I don't know where it is. Like maybe in Japan, very popular in Japan. Some smaller markets. 

[00:50:48] Joseph: Yeah. Like I haven't used a Yahoo since they had season six tv show from about 10 years ago. And, and within the stuck out to me, as you're describing the difference between these two is, you know, Google as a utility versus Yahoo, I think is more of like a lifestyle hub where you'd go onto Yahoo and there's, then there's news and there's articles.

And there is a search bar, but. The the, the seconds, it's only seconds, but the seconds between going to the Google, entering it and getting right away, because I'm in the intention phase right now, I'm not looking for discovery. I'm looking to find exactly what it is I'm looking for. So I never thought about that before.

[00:51:23] Alex Fedotoff: I think some Russian, so I'm from Ukraine originally. I'm using some like brushing browsers from time to time. We're having the mailbox there. And I think they're more similar to, uh, Yahoo. Uh, they're called a young days mail. Like they're more similar to. Um, Yahoo, I guess in that respect, because it's kinda like they give you like a lot of options.

You can go to your mailbox, but it can also see all of these skews and all of these like different tabs. Um, but it's working for that particular market. I sync for Marcus, like United States, crowded people are more compelled with kind of like simplified process of finding exactly what the. Yeah. 

[00:52:04] Joseph: Th that's a, that makes a great deal of sense.

Now with that, I think we're just about to run out of time with you. Cause I know you've got to go. So we're going to, we're going to have to wrap this one up. Um, it has been a fantastic conversation by the way. I, I wrote down a ton of notes, just the stuff that I want to take away and, uh, keeping them in the back of my head.

So to our, to our audience. I think one thing we want to make sure that they're aware of is the e-commerce scaling secrets.com. Um, this is a, a brief video that shows them some of the basics of, you know, how to, I think, how to set up a funnel full disclosure. I didn't see the video in time, but just let us know briefly about this.

I think this is going to be a really good starting point for our audience and then take it from there and let the audience know how else they can find out what you do and what your. 

[00:52:45] Alex Fedotoff: Yeah, thank you for allowing me to plug in. I mean, I think, you know, from your audience, um, and especially, you know, as I mentioned, like people like six, seven figure louder want, I think their success I'll do is realize that idealized, you know, you're a team and, you know, the resources that you guys provide as well, um, from your side.

Um, so we, I have like YouTube channel. It's called Alex Fedotoff. And, um, yeah, we have, we have like, with people in their audience, um, typically more kind of like advanced videos or sophisticated, um, then, uh, I have e-commerce scaling secrets. So this is where we show the one on the same differentiates. Uh, what can we do is we do funnels more like, kind of like final concept.

We haven't talked about a lot is probably need to connect again sometime soon. Like, so it's basically. We want to kind of like guide people to this stage of the process where we are. Um, so we typically have a presale pages, several pre-sell pages, building more value on the product. Definitely some products at the more expensive price than our competitors, because we want to kind of build more value about the product we want to charge more.

We want to make more from each transaction we can afford to buy better quality products, shape. You know, has for the better customer experience and just have other margins than beer, right. That's why apple is like, you know, has this tremendous margins as business and gross up because their margins are like ridiculous.

So, um, this is what we do. This is the final concept. That video explains exactly how we do it. And some people can copy it. Um, they can call was our team of the one to, um, And we'll see if we can help him in any way. It's not. It's fine. So that's. 

[00:54:39] Joseph: Alright. Fantastic. Once more, you have my sincere gratitude for taking the time with us today to chat and, and fills us full of wisdom. A lot of knowledge I gained today. That's for sure. So with that, I'd say thank you and to our audience as always, it is an honor to collect and provide this information to all of you. So I hope you make the best of it. You know what to do from here on, so. And we will check in soon.

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Joseph Ianni

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