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I’m 39. 3 business lessons I wish I knew in my 20s and 30s.
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In 2019 this business was doing $17K a month — today it’s sold nearly $200M of organic coffee. In this episode, I break down the biggest mistakes we avoided, the costly ones we didn’t, and the three lessons I wish I’d known earlier that would’ve saved years of time, stress, and millions of dollars.
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Transcript
Introduction and Business Scaling Journey
00:00:00
Speaker
In January of 2019, our sales were $17,000. Since then, we've sold over $196 million dollars of organic coffee. In this video, I'll share how we did it, including the three things I wish I had known before scaling this business that could have saved us a ton of time and made us way more money and helped avoid some huge
Scaling Lessons Beyond $10 Million
00:00:25
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mistakes. You see, most people think that scaling a business is about doing everything right. The truth is, it's more about avoiding the really big things that can go wrong.
00:00:37
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Knowing the lessons I'm about to share can help you scale your business to $10 million dollars and beyond, easier and with way less pain and stress.
Choosing the Right Business Partner
00:00:46
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First, let's start with a few things that went really well and contributed to 80% of our success.
00:00:52
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First, partnering with somebody with similar values. A mentor once told me, a business partner makes the good times better and the bad times less bad. It took me a while to learn this lesson. I've had good business partners and bad business partners. And early on, I couldn't really tell the difference. I was fortunate to have one in our company, amazing.com. That was incredible. We were very aligned on values.
00:01:15
Speaker
We didn't have any sort of contract for the first year. We didn't even meet in person for the first seven or eight months of doing millions of dollars in sales together. I had another business partner later on in an e-commerce business that we were just not aligned on values. I'd be sitting there at night, sort of with my stomach churning and just imagining something going wrong with this partnership. Nothing had blown up yet, but I saw the writing on the wall that something could happen.
00:01:40
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I didn't like how he ran his personal life and I just knew I had to get out of there. So I wrote him this long message, basically telling him I don't want to be business partners anymore and got out of that. So one of the things that went really well in our business, Life Boost Coffee, is that I chose the right business partner. We found each other.
00:01:58
Speaker
We've had our disagreements, but we've always been very aligned on values. And this is so important to get the right business partner. I prefer and almost will never build a business without a business partner. I'm currently starting an AI video platform with three other partners, and we're all aligned on values. That is the most important thing when choosing a partner. Number one,
Finding and Dominating a Market Niche
00:02:19
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values. Number two, competence. As Warren Buffett said, you can't do a good deal with a bad person.
00:02:25
Speaker
If somebody makes you uncomfortable, if you feel like you need 50-page contract just to start the deal, it's not the right business partner. So the whole idea with all of these is the majority of your success is gonna come from avoiding mistakes, not doing everything right. Big mistake that we avoided, crappy business partners. Number two is we picked a big market and found a niche within that market that was expanding.
00:02:50
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I like to share the saying, if you sell in a niche, you'll never get rich. Big markets are good. I love big markets. A lot of times people are like, oh, this market's saturated. I've done some examples of the electrolyte market. Tons of people selling electrolytes. I remember running a marathon for who knows what reason about a decade ago, and I was taking electrolytes that were created in the 80s back then. And here are brands like Element worth about $200 million dollars that came in just six years ago or so, seven years ago, and they're absolutely crushing it. I love a big market.
00:03:23
Speaker
So we did that from the very beginning. We're in coffee out of all things. The third most drank beverage in the world after water and tea. So what you wanna do is enter a huge market, the bigger the better, but then find an angle within that market. Find some segment of that market that's not being served well. We found people that coffee caused them stomach issues. So having low acid coffee and building our whole brand around that allowed us to build this brand from nothing with no funding, no debt, no any of that sort of stuff.
00:03:53
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to 50 million dollars a year and even though you're starting with a niche eventually you'll be able to reach more and more people we're reaching people who just want healthier coffee not necessarily low acid but we started there because it was easier but now we're expanding broader and broader as our business gets bigger and that's how we take this thing to hundreds of millions of dollars in sales so the big mistake we avoided there was too small of a market Third, focused on only optimizing a few levers at a time.
Marketing Strategy Simplification
00:04:20
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For our first 18 months together, we only had one funnel, just a handful of products, and one traffic source, Facebook ads.
00:04:27
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Big mistake I see a lot of people make, too much complexity early on. They think they need 52 different sales funnels, they need to run TikTok ads, Facebook ads, YouTube ads, do organic stuff, do SEO, do answer engine optimization, basically...
00:04:42
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telling ChatGPT to recommend your product to other people. You don't need any of that sort of stuff until you get to a certain level of size. For the first 18 months, we focused on one traffic source. Then we added affiliates. Then we added Amazon. Then we slowly added other traffic sources. That's a big mistake that we avoided was adding too much complexity early
Financial Management and Cost Control
00:05:03
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on.
00:05:03
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Fourth, we kept operating expenses incredibly low so we could reinvest as much as humanly possible in marketing. Early on, our operating costs were only 5% of revenue.
00:05:17
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We would basically spend about 50% of our revenue on cost of goods sold, product shipping, credit card processing, that kind of thing. So then we had 50% our revenue left. Of that,
00:05:30
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45 out of that 50 went to marketing only 5% basically ran the entire business that allowed us to invest super aggressively in marketing and we're still aggressively investing in marketing just to keep competitors away which is why we have no problem sharing this stuff about our business Not 5% is not our operating costs anymore, but it's still low relative to most other businesses. The other benefit of this is that it creates slack in the business, meaning you have this financial cushion. You don't have this huge load and operational costs that man, if we don't make good sales or profits next month, like we're screwed, we're out of business. It creates some slack in there, which allows you to experiment, to make mistakes, to try things, launch new products if you need to, launch new marketing campaigns, try out different people in different roles. It allows you to have the room to do all of that sort of stuff without worrying if you're going to be out of business the next month. And so allows you to make longer term decisions without so much short term pressure. That's the other benefit of keeping your operational costs very low. And that was a big mistake
Brand Positioning and Mistakes
00:06:31
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we avoided.
00:06:31
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Now, those are things that we avoided. But here are the three things that I wish I knew before we scaled to $196 million. dollars First, we didn't understand the power and nuances of positioning.
00:06:45
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We wasted money on things like coffee scrubs, selling a fish oil product under our brand name, a coffee foam product, an inflammation course, literally an e-learning course that we hired somebody to make. Total of all that stuff.
00:06:59
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Easily a quarter million dollars in hard costs, plus millions of dollars in lost opportunities. It wasn't just the cost of the inventory that we basically had to throw away in some cases. It was the cost of not doing something else that was aligned with the true position of our brand. You want to own a position in the market. There's a reason why these big companies like Procter & Gamble They don't have, you know, Crest laundry detergent. They don't have Tide toothpaste. They own a specific position in the market with those brands.
00:07:31
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There's even Loves and Pampers who are basically both sell diapers, but they occupy very different segments of the market, but they're both owned by Procter & Gamble. You want to determine...
00:07:42
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what is the position we want to own for this brand? For ours, we want to be the healthiest coffee. Anytime we add a product that's not coffee related, such as a supplement, then it dilutes that position. Because then somebody's wondering, is this a coffee company or is it a supplement company? Everyone likes the idea of building this platform brand. In my opinion, that's kind of stupid. And that's a way to allow competitors to have a very easy job of coming in and saying like, hey, you know, they're doing 12 different things. We just do this one thing really well.
00:08:11
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And we all know this as a consumer. Who are you going to buy? The company who this is their 15th product while their main business is over here? Or the one that this is literally all they do? This is the only kind of product that they sell? Whose product are you going to buy? That's what you need to do with your business. And that's what we messed up on early on. why This is why I'm sharing this lesson with you.
00:08:30
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So you have to decide what market do you want to own? We made the mistake of diluting our positioning, wasting a bunch of money and having to pull back. Eventually we finally realized that the position we want to own is to be the healthy coffee. Once that got clear, everything else in the business got way more clear and easier.
Communication in Scaling Businesses
00:08:51
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Second, As your company grows, so does your need to communicate. I made a huge mistake a few years ago in our business. We had scaled this business from nothing, $17,000 a month to millions of dollars a month in just a few years. And a lot of that scale came from me working on our landing pages, then a guy that I'd known for years, who's I think one of the best Facebook advertisers in the world, he was running the Facebook ads, I was doing the landing pages, we were talking almost constantly. And so that team allowed us to scale this thing from nothing to millions of dollars a month, which worked fantastically for the first couple years.
00:09:26
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But as this business grew to thousands and thousands of orders every single month, thousands and thousands of customers and millions of dollars per month in sales and multiple platforms and traffic channels, and the team was growing,
00:09:38
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We couldn't operate like that, but I didn't realize that at the time. All the rest of the company was all working well together. They all knew what was going on. They were running promotions together, planning operations, while me and our advertiser were just operating over here.
00:09:51
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And ad performance had stagnated for a little bit, partially because we were trying to optimize for profitability, but I could see outside looking in, you know, we're still spending the same amount of money we had been spending six months ago per month on Facebook, and we wanted to increase that, and we weren't.
00:10:05
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So then other agencies started coming along saying, hey, we can do a better job. They were more integrated with the team because they were already running other parts of the business. So we fired our Facebook advertiser, switched over to them, and the next month burned a half a million dollars.
00:10:18
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More importantly and more painful, we burned the relationship with the guy who was running our ads. I still get along well with him, but because of that experience and how it was handled, he doesn't want to run our ads anymore.
00:10:29
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And it's not because it won't make him a lot of money. It's because he's got other clients and even has one client that is a publicly traded company that competes with us. So now he's taking all of his brainpower and putting it over there instead of our business. That is what happens when you try to run a business that's at $10 million dollars plus, like it's a business that's at a million dollars at a million dollars, small team, everyone knows everyone. And you're probably running the whole ship because you're the founder. Very easy to operate. Once you start getting bigger, $10 million dollars plus, you have to communicate better. People can't be operating in silos. Otherwise, you'll cause lots of damage.
00:11:02
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And this lack of alignment and lack of communication has affected businesses much bigger than ours and founders that could have been worth billions of dollars. John Silvan invented a new way to brew coffee decades ago.
00:11:15
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But as the company took on investors, he didn't get along well with them, didn't really operate well with them, didn't communicate well with them. And basically he ended up selling a share sort of in anger for $50,000. That product that he invented is called Keurig and is part of the $38 billion Keurig Dr. Pepper company. Big lesson here, as your company grows, so does your role and responsibilities. You have to grow with the business and do what's in the interest of all the stakeholders, not just yourself.
Timing in Business Sales
00:11:45
Speaker
If you want to learn how to scale an e-commerce business to $10 million dollars and beyond, subscribe to my 100% free newsletter, The Scaling Journal at mattc.com slash newsletter. I go into a lot more depth in a lot areas and do these same topics.
00:12:01
Speaker
So lastly, number three is related to selling your business. I learned the hard way over the past five years or so that timing is everything. There was this crazy period in 2021, which at the time we realized was kind of euphoric. I mean, all the stocks and all the meme stocks and everything was going up, but that was the same thing happening in the private market. I've got a buddy who sold a pet supplement business for three and a half times revenue.
00:12:25
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It was doing about $60 million dollars a year, so it'd grown very quickly. He sold it for almost $200 million dollars around 2021. I had another friend who had exited a software business a year or two before, and they basically had this second valuation sort of kick in during that time period, double the amount of money he made from his exit, was not expecting that whatsoever.
00:12:45
Speaker
We, on the other hand, were too slow getting the market. We've tried to sell this business twice because that was our original goal. And so we tried once and we tried to hustle and get to the market, but we were too slow. We didn't work hard enough to get in the market when it was extremely hot. So we got in right afterwards. We paid this bank who didn't do that good of a job $50,000 and they did basically nothing. And then at that point, we ended up not selling the business. It was on the market for a year. was a huge distraction, complete waste of time. because we're at the wrong time in the market.
00:13:16
Speaker
Then we tried to sell it again, and this investment bank was very good. Same one my friend worked with. They did absolutely nothing wrong, but it's just not the right time in the market. We're getting offers and stuff, but they're not exciting enough for us. So we're deciding not to sell it. And I don't even know at this point if selling any business is worth it unless You're in a euphoric time period because that's when you get an outsized return. Now, if you're just ready to get out of the business, you don't like it anymore, you got something else you want to do, it's a pain in the butt to run, but none of that is true in our case. We were just trying to see if we could get those 2021 valuations when it's not 2021 anymore, and that doesn't happen.
00:13:50
Speaker
And so if I knew what I know now, I would have pushed way harder to sell in 2021 before everything crashed. And if you're looking forward, these kind of time periods happen, you know, maybe once every five to 10 years. And so I'd recommend waiting. If you want to sell, just wait until the market is favorable. Sometime in the next five to 10 years, it's going to happen again for your type of business, for your type of industry. Just keep building your business. A buddy of mine who told me, He owns a business that does about $80 million dollars a year in the consumer space. He's owned a brokerage and sometimes he can be hyper rational. I probably should've just listened him. He's like, Matt, he's like, just keep grinding it out. he's like, now's not the right time. He told me that a year ago, he was a hundred percent correct. Cause in this last time around investment bank, incredible job, great people, highly recommend them to anybody,
00:14:37
Speaker
but we also spent a hundred grand on an accounting company to do this basically an audit which is required for the process the investment bank fortunately has been one hundred percent commission based so not a good deal for them that we ended up deciding not to sell this business ah but the accounting company that's not their job we basically had to pay them a hundred grand so we're 150 grand out and the most more importantly a huge and distraction this entire time period we're taking our attention away from growing the business from scaling the sales fortunately now all this is over and we're back to scaling this business to be what it can be building the great products possible getting this business into retail and scaling this company and absolutely dominating the market so the last couple times i're trying to do this huge distraction so my takeaway for you
00:15:20
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is don't worry about any of that kind of stuff. Don't worry about selling your business let the unless the market is extremely favorable. And the big mistake we could have avoided was waiting until the timing was good.
Summary of Key Success Factors
00:15:32
Speaker
So the big idea here with this video is success is more about avoiding the big mistakes than doing everything right. Partner only with good people. Pick a big market. Focus on the few things that matter. Keep operating expenses low. Create a strong position and stick to it. And you can't run a $10 million dollars business like a million dollar business. And if you want extraordinary money for your company, wait for extraordinary times, which only happens once or twice a decade.
00:15:59
Speaker
So by the time you watch this video, we will have likely sold over $200 million dollars of organic coffee because we sell $4 or $5 million dollars a month. We did this in a commoditized market, selling a product with mediocre margins. Our success has come from avoiding the huge dumb mistakes, many of which I made in previous businesses.
00:16:19
Speaker
Now, what we call e-commerce is essentially the same business model that Nike, Red Bull, and Louis Vuitton used to build multi-billion dollar brands. You're building a consumer brand and just happen to be selling the products online. So absolutely keep that in mind as you're building your business. E-commerce just gives you a huge tailwind because it's growing by $600 billion dollars a year. Still, only one-fifth of total retail stuff happens online, but online keeps growing every single year. So it's still a great business.
00:16:49
Speaker
But you're really building a consumer brand, a business that's created more millionaires and billionaires than almost any other type of business in history. All you have to do, sell good products, build a great brand, keep your costs low, take care of the customer, and most importantly, avoid the huge dumb mistakes. Keep at it and you can achieve your biggest dreams and goals in this business. I believe in you.