When I graduated college, I was lucky enough to step in a rich pile of shit, so to speak. During college I was mostly like everyone else. Sure, I already had a trading account, a Roth Ira, a small vending machine business and some small time success selling blenders, but I hadn’t really “made it” in the grand scheme of things. However, when I was doing my friend Kyle Pfaff a favor, a major lightbulb went off.
Kyle came to me to sell his Financial Accounting book on Amazon after being told the book store would buy it back for a whopping $3. Three. Dollars. He paid $250 for the textbook three months ago, talk about devaluation! Later that day, I sold it for $114 on Amazon with just a few minutes work (this is that lightbulb moment).
Fast forward a few months, with the help of some much “smarter” friends at MIT, I had over 150,000 books on Amazon ready for the August rush, when everyone was going back to school. There are roughly 3,000,000 book listings on Amazon, I had covered 5% of the textbook market and on top of that I was the cheapest listing on each. You’ll often hear people talk about being lucky or in the right place at the right time, and this was one of them.
The tricky part about selling on Amazon is how they judge accounts. For example, my Amazon seller account had been open for 4 years already while drumming up solid feedback from all the blenders I’d sold. Now all of a sudden I’m having $50,000 days, Amazon was not too concerned, because they saw my history. Had I done this with an account that was opened a only week prior, that account would have been shut down within 24 hours for review. I don’t have to reach for the irony when I tell you I sold half a million dollars worth of textbooks just a month after barely getting my diploma with a 2.4 GPA. I will be the first to admit that the influx of sales quickly went to my head.
Similar to when we buy a stock breaking out to new highs, all we can focus on is how much more we will make, and we tend to avoid the downside. Just like this business, $500,000 in a month? That’s $6million a year, I’m set for life.
That is, of course, until you see the most terrifying red flag an Amazon seller can see.
I’ve never had anxiety in my life, but after seeing that my account was under review, and coupled with the fact Amazon had all my money in a choke-hold, I was feeling a bit queasy. So after my monstrous August run, where I cleaned up and got two payments (Amazon pays out twice a month), the remainder of my funds were locked up for 90+ days. No if’s, and’s, or but’s about it.
I’d gotten just enough out of those two payments to cover some of my costs but I had to let most of the debt sit on my high interest credit cards that were incurring $100 a day in interest (and when they can hold your money for 90+ days that’s a lot of coin in interest). I stare at an untouchable goldmine for the next three months, racking up interest. I have to thank Amazon though because that was such a humbling experience and taught me a level of patience that most of my peers will not learn or understand until much later in life.
So at this point, my shop was closed with an account balance that I had intended to use to fund my goal of buying my Aston Martin less than a year out of school. I needed a plan B, so if my account is down what to do next?
(inner monologue)
[Think Bennett, think you low GPA half-ass motherfucker]
Got it, how did you expand the sour straw business? (talking to myself) Your friends.
And the blender business? (talking to myself) Your friends!
None of them were selling on Amazon and most were just as broke as I was. My plan was simple, get them to open accounts, teach them and have them sell my products. Now by doing this it helped in a few ways:
- I didn't have to spend 10 hours a day fulfilling the hundreds of orders that were coming in (if you have enough late shipments that are not confirmed, Amazon will suspend you).
- I didn't have to respond to the hundreds of emails a day from people asking for tracking numbers (if you take longer than 24 hours to answer an email, Amazon will suspend you).
- I didn't have to worry about selling too much in one day with enough accounts open (if your account is less than a few months old and you start selling $500+ in sales a day, you can be flagged for a review).
After figuring this out I hired my first friend, within a few months we grew to over 20 people each with Amazon accounts selling my product. There were even products that I cornered the market in, and by this I mean that I would own the first five lowest priced items on the listing, something that is no longer allowed (but it was quite the profitable endeavor when I was selling $70,000 worth of a single product on Black Friday). I had a guy who did all the hiring and training, while I oversaw the operation, collected the cash, made sure the 1099s were filed etc. Sure I had to pay everyone, but my 16 hour days were just sliced in half, all the while strengthening the business.
Now some friends will be happy for you when you start to make money, but it will rub others the wrong way and during this time I was giddy with excitement:
I made $30,000 this week how was your week? I would say as my less fortunate friend would reply Umm I get paid next week. It didn't really phase me at how brash I was being, until I was over one of my best friend, Skender’s house and he had a girl over. I was setting up his Amazon account and chatting with him about the money we were going to make and the girl was staring at us as if we were made of gold. I was mentioning how I sold $40,000 worth of product that week and that once Skender was up and running he would be getting a piece of the pie.
Cute girl “So you guys work together?”
Without even a second to pause I fire off “he works for me”.
Cocky? Just a bit would be an understatement. I had just dissed my best friend in front of the cute girl that he was hanging out with. Skender was a G and didn't say anything however I felt the mood in the room shift. The cute girl had to leave to go to work and after she left, Skender came back in the living room and for the first time in our friendship he addressed me in such a stern tone that it shocked me.
“Never say that again.”
He replied with authority. At that moment I realized for the last few months I had been a prick to some of my closest friends. Now this was almost 6 years ago, and I can still remember that moment down to the finest detail. After that day I made a pact to make a few changes:
- I only work with people, no one works for me
- I will not mention the amount of sales I’ve made or profits I’ve made to someone making less than me
- Even if the person is just an employee doing a menial task, I will address them or title them with a position that makes them feel superior
Now I am no monk and I’m far from perfect, but I have done my best to stand by those changes. Though the last one has given some of the people who have worked with me that same level of cockiness, where they felt they deserved more, so I would have to quickly check. Now don't worry, Skender and I are still boys. It's funny, fast forward 6 years later and he is now my CPA and just got a fat check for all his billable hours doing my tax return, TE’s return’s and all of the people I referred to him over the years. Skender when we going to get Accounting Experts up and running? Remember sometimes it pays to speak up.
More Value Task - For this is one that I am going to be a tad selfish, I would like for you to give me 3 things that I can work on to improve Trading Experts or the Value program. Trust me be honest, I appreciate real feedback, you don't have to complaint sandwich me (a positive, negative, ending with a positive). When you are running a business you tend to see it only from one side, however your back tends to be exposed. When you have people you can trust who can watch your back, you will always be a step ahead of your competition.