John Hefter Interview with Nick Shucet

[00:00:00] Nick Shucet: 

You're listening to the Million Dollar Sellers Podcast with your host, Nick Shucet. Today's show features another amazing entrepreneur who has found success online. Now, let's learn what it takes to be a million-dollar seller. All right, MDS podcast listeners.

So I just got done recording with John Hefter, co-founder of Thrasio, a billion-dollar company Amazon aggregator that owns more than 200 brands on the Amazon platform, 85 million in EBITDA in Q4, and John at one point had managed 600 plus employees himself. So this is a great podcast to listen to if you have a couple of Amazon brands looking to scale your company, or if you're an Amazon seller looking to sell your business as well.

Lots of great stuff in here on team-building, creating a great company culture, and surrounding yourself with those people who are going to help grow your company and allow you to get out of the way and focus on what you are good at doing. So highly, highly recommend you guys check out this podcast. If you're looking to understand how someone who helped grow a company with 1500 plus people in a year has managed 600 plus people himself.

If you're trying to understand how they think, how they approach a difficult situation, and how they train people, this is going to give you insights into a guy who's done it and is continuing to do it. A lot of his success has to do with the way that he thinks how he approaches difficult situations and how he focuses on empowering those around him to make good decisions as well.

So like I said, if you're looking to scale your company, this is a podcast you do not want to miss. And if you're in MDS, if you're a seller, you're going to want to hear this one too, to kind of understand what aggregators are looking at and what things you can do to be prepared when you're looking to sell your company.

And if you're just interested in mindset and how someone approaches these great things that Thrasio has been able to accomplish, then this is a podcast you're, you'll want to listen to. All right. Welcome to the MDs podcast. I'm your host, Nick Shucet. Today we have a great guest on the show. Jonathan Hefter. John, it's great to sit down and chat with you, man.

Always great seeing you at events. So how's it going today? 

[00:03:01] John Hefter: 

Fantastic man. Good to be here.

John Hefter’s Daily Routine

[00:03:04] Nick Shucet: 

Nice man. So you into any interesting daily routines now with the new year, doing any daily meditations or anything like that? 

[00:03:13] John Hefter: 

I wouldn't say that I'm really at the meditative type, but I have been doing some of the Wim Hoff stuff recently. Right. And, I am a believer in like really hot saunas, particularly this time of year, and this is sort of like how your body reacts to exposing itself to extreme temperatures on both sides. So doing that and after a long year of travel and cocktails, just spending a little time off from that and getting some good exercise, good sleep too.

Hopefully, my body survives another year of it as it comes up, starting in the next month or so here.

[00:03:55] Nick Shucet: 

Right on man. I know, I'm into quite a few of those things and I know a lot of members in the group are as well. I've been doing a little bit of cryotherapy myself recently. I've been doing the chamber versus the water, but I think the water is the way to go. Have you been in one of those chambers? I haven't. 

[00:04:12] John Hefter: 

Been in one of the chambers, but luckily I live in the Northeast. So the chamber is just outside.

John Hefter: Self-Discovery Journey

[00:04:18] Nick Shucet: 

I hear you on that man. Well man it's great to have you on the show. I haven't recorded in a little while. It's been like one or two months. So it's great to get back on here with such an interesting person. I've had the pleasure of meeting you a couple of times, and hanging out with you in person. And I think you kind of have that vibe where you can kind of captivate the audience and really inspire people. I like to call it kind of like the John Wayne Clint Eastwood vibe, I guess is how I look at it.

[00:04:51] John Hefter: 

You realize you've just set me up for like utter failure on this podcast.

[00:04:59] Nick Shucet: 

I think it was in Jackson Hole when I first met you. So the cowboy vibe was already. 

[00:05:03] John Hefter: 

You got it. Yeah. 

[00:05:06] Nick Shucet: 

But yeah, man, for those that don't know you yet, why don't you introduce yourself, like how you founded and took part in Thrasio and what you have going on there at the moment?

[00:05:19] John Hefter: 

Sure. Yeah. I always love anything, with a good origin story. Right? If you watch any of the Marvel movies I'm always interested in Peter Parker before he's Spiderman or the moment he becomes more than I am, like the destroying buildings or whatever they're doing after that. So I'm always happy to tell this story, not comparing myself to a Spider-Man, let's be clear about that.

Getting Ready for Serendipity

[00:05:42] John Hefter:

But for me, it's there, there's always these sort of serendipitous moments in life where things just sort of come together. Now serendipity, I'll put a little asterisk to that, it's also tied to making a series of proper choices prior to reaching that moment where you can take advantage of certain things.

But I always consider myself a very, very open person, in the sense of open to new ideas, open to trying things new, and open to this concept that is like, if you want success, one of the key tenets you need to have is a lack of fear of failure. So if you want success, you have to not care about success, something like that. And so because of that, I was always putting my hands and things that I found to be interesting.

So in my career, I've worked in magazines. I've worked in television, I've worked in running and owning small businesses of all different types. It was in the hotel and restaurant business. I've done pop-up antique stores, writing for various degrees.

Meeting Carlos Cashman

[00:06:52] John Hefter:

I got a master's degree for no reason. I was just sort of going through the world, trying to figure out what the hell I was and what I was good at. And one thing becomes clear after a while. I was really good at sales, and I was really good at just understanding what it took to sell. And so I was trying to like, all right, well, how do I turn that into something that's really useful skill?

So, I started some businesses and did pretty well with them. Sold a few, and had some real ups and downs, just being a kid and learning how to do that. We got to a point where I actually met Carlos at a cocktail party, and we just hit it off really well. He had had a Facebook ad agency, and maybe it was our first or second meeting. He was sort of catching about.

I have all these clients and they're blaming the traffic on their outcomes, but really, I think it's their branding. And I was like, oh well let me check it out. Let me show you a couple of your clients. So he showed me like three or four of them and I was like, oh yeah, that's right. Oh, it's wrong. I would do this. Fix that. Oh, that's stupid. This is the way to do it. How do you not see that? And he was like, this is great stuff. Can you come in on Monday, and maybe talk to my team?

How the Thrasio Team Started

[00:08:07] John Hefter:

I had set up my previous job after I sold the company to an old client. And I ran his sales and marketing divisions and kind of had put it on autopilot to the point where like I was, sorry, Jamie. I was working like 10 hours a week, and being paid pretty handsomely for it. And so I had all this extra time. And so I just started working on some of Carlos's brands and then Carlos realized he was going to sell his company.

And we just enjoyed hanging out with each other. So it's like, all right, well, what are we gonna do next? So we got samples. We're going to start like a luxury pillow brand. We had ideas for like a ski, goggle, and sunglass brands that we're going to run and sort of do an e-commerce play. As this was happening, a lot of clients started coming into Orion and saying, Hey, I'm doing really well on my Facebook ads, but my Amazon's crushing it right now.

And so that sort of like put this idea in our heads and Josh, one of the most brilliant, one of the other co-founders brilliant financial minds I've ever met had had this idea of like a roll-up for a long time. So then it sort of came together. I was like, oh, well maybe they, the roll-up is this Amazon thing.

And, because of Josh’s experience, because Carlos had already done multiple exits, we had access to capital, both from them and from investors they were very close with and we were able to start this experiment. At that point too, Stephanie Fox our COO, was actually Carlos’ first client that's back at Orion, and she had this really cool business.

She had a member of the family that had cancer. And so she did this company called Bravelets that sold bracelets with a little sort of like platitudes on them. And they would give money to charity. She didn't realize that she gave too much away to charity so that business was in flux. Carlos had sold his business. We were already working on this thing and we really just sort of hodgepodge the whole thing together.

And December 2017, right about the week before Christmas is when I opened up my laptop for the first time and Googled, like, how do you buy an Amazon business?

Launching into Amazon Brand Acquisitions

[00:10:17] Nick Shucet: 

Okay. So nice man. Nice. I like it. It sounds like you guys kind of had like, the recipe really needed there for this emerging niche, which is just so interesting. When you think about what these big companies like Amazon create without even knowing it, right? You had all these kinds of side hustle entrepreneurs start to make a crapload of money on Amazon.

And then, selling the Amazon businesses starts becoming a thing, but then there's so much to running a business and I think I learned this myself, that you just don't learn just by selling on Amazon. So when you try to like to go into this other world, like selling a business or something like that, there's all this stuff you don't know this information and experience that you don't have.

Totally. And it seems like you guys have just kind of jumped in and filled that gap, and have allowed some of these entrepreneurs to do some pretty amazing things by selling them. 

[00:11:24] John Hefter: 

I think a big thing for us, first of all, was the combination of people and the opportunity in the market. So you had Josh who was one of the most brilliant business strategists and financial minds I've ever run into. Right. Carlos had all this wonderful experience already doing, building, and selling businesses. And also has maybe one of the best networks I've ever met.

And just sort of a calm leadership, demeanor. Stephanie is an operations hawk. She just loves details and controlling all that stuff, and I'm sort of like a, I don't know, someone who's a Barker on the Atlantic City, boardwalk sell anything, figure anything out like that sort of thing. You put the hustler-type guy, you put all those pieces together and then you start adding a brand.

And who's amazing at marketing and a real supply chain expert? And we had this realization, the second thing was like, all right, we have this diverse attack. , and we don't know there's a lot. We really don't know. So we're going to hire into the places where we're ignorant. And that was really, what, what allowed us to buy and scale businesses properly is understanding.

We don't know a lot. And by the way, sellers who are awesome at what they do. They can't know everything either. So they're really good branding people. They had a hookup in China with a supply chain or something that allowed them to succeed and maybe that is a combination of things, but there are missing other places.So the idea was like, well, if we can fill those voids ourselves.

Then when we acquire these things, there'll be an opportunity to maximize their outputs over time. So that's the core thesis. And then when we started, man, I go back to 2018. There were Website Closers around Empire Flippers, and a few other guys, Quiet Light, selling these brands.And our competition was literally like an accountant in Ohio who was retiring right there.

Just wasn't. There was no base of a competitive marketplace until real news started getting out about our success. And it led to this real kind of. The zeitgeists right. That opened up an entirely new market, which I think has been incredibly beneficial for sellers everywhere, including members of MDs, no matter what, who you sell to, if you decide to sell our hands are sort of on that deal and a passive sense because multiples have increased greatly since when we start.

Aggregator Market Trends and Thrasio’s Market Influence

[00:13:46] Nick Shucet: 

Yeah. And it's like you said, the market has kind of really just exploded. And I think last year, what I saw some Metro, I think it said like 5 billion I've been raised in that industry or some ridiculous number in the [00:14:00] past year. So yeah, it's crazy how much they're popping up, man. And it's, it's going to be interesting to see. I like how it all plays out.

Right? You have this phase that's going on in this transition. It was these single-person businesses, or, maybe they had a significant other or a couple of virtual assistants in the Philippines. And they had their eyes on the business constantly. And now, we've got people coming in with bigger pockets, but not necessarily that Amazon experience or those experienced eyes on it daily.

So I know, like, I want to talk about what you think about where the aggregator market's going for sellers and buyers, but I'm also curious to know how you guys are filling that gap of Amazon knowledge, and continuing to grow those brands on Amazon.

[00:14:54] John Hefter: 

Yeah. I mean, our look at growing our brands is based on a [00:15:00] variety of factors. The first one is just knowing what you've got. You don't want to force anything where it doesn't need to be forced. So some brands that we buy, we understand exactly what they are. There'll be a coat hanger brand. And there's nothing, it has no sex appeal,

It's just a utility product with tons of reviews. And that has a certain level of limitation to it. So that is like, all right, well now is their creative really good? Have they done sponsored videos? And they know what they're doing there. Do they have Google optimized? Have they worked long-term contracts out with their suppliers? And those are levers we can pull for that branch.

Okay. And then we might have another brand that sort of has some potential life to it outside of Amazon, whether it's in retail, whether it's direct to consumer, appropriate fit for affiliate placements. And so what we do is sort of like an à la carte sort of approach to all the brands we acquire [00:16:00] and we come up with a plan to like, all right, well, how do we maximize.

Value here. Right? One thing we have that no other aggregator has at any sort of scale is a very massive product launch team. Okay. So we can take over a brand and within a year, have new versions available, a variety of variations, and ways just to continue and stabilize organic growth there.So that's really how we approach it. And there's probably say 10% of our portfolio where it's like, there's something really special to this brand.

One that everyone knows we own is like Angry Orange, it’s one of the first deals we did, and I remember I got off the phone with the broker. He was not there anymore at Empire Flippers, and I told Carlos, I was like, this is a hill I'm gonna die on. If I'm wrong, just fire me, bear me out of the desert. I don't care. We're buying this freaking thing.

I want it. And then I ordered [00:17:00] it that night. Two days later it came in from Amazon and I opened it up and took one sniff of it. And I was like, Carlos do you smell that? Because I smell gold. Right. And I just knew we had, I knew we had something, and it just has this vibe to it that creates interests that can compel people to buy directly to consumers. They'll make people stop and be interested in it and in retail.

And so then you're like, all right, well, let's take some of our top resources and focus on making this thing, whether it's a $2 million brand or $10 million brand into a hundred million dollar brand in the next few years. So it's really just like, there is no one size fits all for any of this stuff.

Team Building and Accountability

[00:17:40] Nick Shucet: 

Right. Yeah, man. It's tough. So I like that you guys take that à la carte approach and have been able to just be successful with that and continue to scale and build out the team to continue to do that. Right. Cause I think that's hard to do. When you have to be that, you take that unique creative approach with each brand you're looking at rather than applying a blanket approach to everything.

So that's awesome, man. I mean, how do you guys build out your teams and like, get, get enough people on an account, and hold them accountable, know that they're being successful and, and things are being run the way that you guys want them to.

[00:18:24] John Hefter: 

It's immensely challenging. , one thing, that I was ignorant of when we started this company is, is now we're we're north of 1500 us hires, right? , from four of us who started in that little office next to a Dunkin Donuts, I can still kind of see out the window of my house right now. How many times we'd have to restructure? Yeah it's really hard to fathom if you run a small business and you've taken it from even 10 to 20 people, maybe even 50 things kind of feel the same.

You can always get communication with the person you need to talk to when you become 1500 people. Wow. It's just, it's immensely different. Right. , like by the Dunbar principle, we're only really allowed to capture in our brains 105 people as a community right. Of the people we know and understand and know how to engage with, once you go beyond that, you're not really connected, so, so how do you solve it?

Problems like this, where, some, a creative brand manager wants to make a strong claim on a product, like put it on there. , because they found out from their supplier that, you're allowed to make this claim for whatever reason. Right. , and it makes the sales go way up. But then that has to go through our compliance legal department, whose job is to think like we want a hundred percent safety rebate.

Yeah. So maybe we'll not allow that claim to happen. So how do you resolve those sorts of conflicts who gets to talk to suppliers and negotiate deals? Right. , how's the accounting handled? How, are outside services handled, from an agency standpoint or internally attached, a team who's responsible for the P and L of each of these products and each of these brands?

And how do you assign those things? Right? There's again, that's, that's one of 75 questions you have to answer. And it becomes very complicated and you build something that's functional. , and you find out that within about a nine-month period, you have to start rethinking how it's being built again, and then tear it up and rebuild it.

So for us, that con constant sort of like Phoenix approach to this whole thing of, of, tearing something down, not being afraid to burn off dead wood. , rebuilding it, trying to get more efficient, and taking that as far as it can, until it breaks to rebuild is something we're constantly doing and it's immensely challenging and tiresome but needed.

So that was one of the things for us too, is like we had to realize early on that, we did not have those skills. We had such amazing talent on our team of which I'm, moderately talented amongst that, that early, early group of people we have. , but. We didn't have a lot of giant corporate experience. Okay.

So we had to bring that in people who had, who had dealt with, comms and communication across teams had built structures that can make a 1500 person company work had led groups of people that large, it's been a. It's been daunting, it's, we w has been published that we were the fastest profitable company ever to reach a billion-dollar valuation in our history.

Well, whether that's true or not, like it was certainly, it was really fast. , so to deal with that. So, the changes that come with that have been, an immense, , but rewarding challenge.

Build Team Culture and Alignment that Grows Your Business

[00:22:00] Nick Shucet: 

Wow, man. I've only experienced like a small piece of the puzzle that you just mentioned, man. And, to be honest, like I couldn't, I, I didn't really have the discipline motivation consistency to, to continue to try to build out a team because I felt like I was just kind of banging my head. The wall. And then I kinda realized, I think you just kind of have to bang your head against the wall a little bit until you just bang the wall down.

Right. And I kind of just, hiring a man and, and training people, putting your time in, and then they quit, or someone takes them away or something, something happens, man. I just, That was the feeling I had to escape, and focus on some other things, man, because, I am the type of person who wants to constantly optimize things.

And I like how you guys had that target like nine months, you guys are, are tearing stuff down and rebuilding it and constantly optimizing. And I think that's so important, in digital entrepreneurship, in the e-commerce space, because you just have so many. Smart people doing really great things, honestly, in my opinion, and you have to keep up. 

[00:23:13] John Hefter: 

It's interesting. That was something you mentioned that, when you have small teams, it's maybe it's just not intuitive that you would spend a lot of time thinking about this. It's employee retention and culture and how you want to, live your business life, , for us. , something that was. Massively important. The early days were, incredibly fun.

We had such an open collaborative environment, we had this rule, the no assholes. So we found anyone who was a jerk, no matter how talented they were, they would be sort of shown the door kind of naturally within a few months. , and that worked out really well for us. There was no. , anyone trying to crawl over each other for power influence, it was all this sort of like, how can I help you?

Oh, you made a mistake. That's funny. Even if it's almost catastrophic, let's laugh about it and figure out a way to try to fix it. Let's allow people a tremendous amount of freedom on this point where it's not uncomfortable because they're smart and they'll go out in the world and figure out what needs to be done. and that warmth that we had, which still permeates through us to this day was, amazing.

Catalysts, of our future stability. So our retention rate is out through the door. Hi, our Glassdoor scores are crazy high. We were ranked number one mid-sized business in America by Business magazine. As far as culture goes, recently this last year and it's because we really put people first and not just some sort of tripe corporate way.

But we want people to be happy and engaged, and we understand that if the right things and their neurochemistry are flowing, the proper hits of dopamine and serotonin, and they're not just filled with cortisol because they have a tyrannical boss who's always up their ass. So always demanding things always have unreasonable expectations, who doesn't show trust, who doesn't show forgiveness or friendliness?

That like you get people who don't, who get burned out faster. Don't want to stay. And. We just didn't want to build a place that was like it, it's not worth it. Right. It's not worth it for your own sort of, your own sanity, let alone that, of everyone who works for you. , and there is like our culture is this sort of like, I'm a lone Wolf grinder, man. , put myself in my bootstrap. I just crush it. I kill, and, and, well, all right, that's fine.

I guess in the early days, Yeah, but, but how do you, how do you build this work family around you and, and how do you make it as stable as possible? And if you are like, if you are, a tyrant parents, right? Those are the kids who leave the house when they're 15. Yeah. Right. And, and, and so like to me finding that balance and constantly assessing the value of culture, even whether you're in a winning or losing locker room is something really worth spending a lot of time considering.

And so I say that for the sellers who are out there and our MDS partners here, like make sense, self-assessments. I sort of say this line a lot. It's like if, if you could clone yourself, would you want to work for yourself? And it's a good first question to ask. Yeah.

Grow By Giving More Control to Your Team

[00:26:55] Nick Shucet: 

I love that you guys, a lot of people say stuff like this. Right. And, it's, it all sounds great, but you guys are actually making it happen. I like how you touched on like, down to the neurological level of what's going on in someone's brain with cortisol, dopamine, and serotonin, you mentioned that you guys are doing mandatory vacations this year.

Right. And, and there's plenty of research. We could dig up to show that that's going to have a positive impact on the way that, people are thinking about things and looking at things. , so I love that you guys are actually taking action on this stuff as well. And, and it's interesting, like the evolution of a lot of entrepreneurs where, like in the beginning, It's all about grinding, and we're able to take that on for a variety of reasons for a little while.

And then, and then you get a little bit of success and you start to get burnt out. , and then there has to be the shift where you want to grow. If you want to grow, maybe you decide to just stay where you're at, but if you want to grow, you've got to give up some control, take a little risk, and put some faith in other people. And it's, it's interesting going through that it's interesting watching other people go through it and come out on the other side, successful 

[00:28:16] John Hefter: 

You have to put your mind to it. If you're able and look, the giving up stuff is, is really difficult. I know firsthand. At one point I had roughly 600 people under me in some fashion or other, and I've given most of that away and it can be sort of torturous and she's like, oh if I give this thing away, this is my baby. How's it going to perform? I was going to do, but if you, if you want to scale.

You have to release your ego and be able enough to know that like you have to let things go. And if you, I always tell people that a sign of a good boss is someone who could leave and go on a six-month Ayahuasca trip and like come back and their business is still functional. Right? It's as if they're not sort of like this master puppeteer, who's like working over things.

When you do give up. And to put yourself in a mindset, of the employees or partners who are working with you, who are managing things. So when, if you are very tough on people and you demand results and you're unforgiving of mistakes, What you get is sort of like what's called middle management conformity. And what that really is the propensity for when someone's paid reasonably well, to be very safe.

Right. What they want to do is protect what they have not been. , really not really focused on ingenuity, creativity, abstract thinking, things that are sort of outside the norm. If that's your style and you expect perfection from results from people, then you're going to get those sorts of results. Which are sort of at that mid-tier growth potential point.

So you really have to create a culture that allows people the chance to be creative and to be open and to make mistakes. If you're going to really grow somewhere that special. 

Number of Brands Under Thrasio 

[00:30:15] Nick Shucet: 

Amazing man. Yeah. I love how you're breaking it down and just what it's all about, empowering people around you, to be confident, and to make decisions. Look at where it's gotten you guys. I mean, you guys have, have done it and have accomplished amazing things. And I mean, what, what what's like how many brands have you guys bought or if you're able to share that information, like, what are you guys sure. Managing on Amazon right now?

[00:30:41] John Hefter: 

So we're, we're over 200. I don't know our exact number right now., but yes, it's pretty daunting to go past that point where in the early days, when I knew every ASIN and could probably recall what their product descriptions were at one point, and to now get to a point where I probably know 40% of the brands maybe it's 60%, I don't know a pretty daunting thing to consider.

[00:31:11] Nick Shucet: 

Amazing man. Yeah, 200 plus brands. Yeah. That's a lot. It's a lot of, a lot of seller support cases and 

[00:31:19] John Hefter: 

yeah, and likely a lot of, a lot of places where we still haven't found optimal efficiencies. Right. Right, right. 

[00:31:28] Nick Shucet: 

So opportunity. I mean, I'm, it's, it's interesting now that we have all these, companies like Thrasio in the picture, but like Amazon man, it's just like a, a sea of opportunity. I mean, it's, it's interesting. The stuff that pops up on there.

Thrasio’s Goals and What’s Next

[00:31:44] Nick Shucet: 

Yeah. So, I mean, what, what's next for Thrasio? What are your goals, for the next year, where do you guys see this aggregator market going? , with all these new companies that have popped up, and all these sellers that, [00:32:00] are, holding on to their business, waiting to get a buyout.

[00:32:05] John Hefter: 

Sure. I think this year for us is going to be about optimization and efficiency. We've built this thing so fast that when you build something super fast, it's not going to be perfect. So, we're going to retool the engine a little bit and spend a lot of time. Deciphering what's really working for us and what we need to do better? For us, while we're still going to scale at what most people consider to be a crazy rate.

From an acquisition standpoint, I think we're going to take a little bit of a step back and just make sure that, that our machine is running as efficiently as possible. , and that to me is it's a really important thing. Every successful large company has gone through these periods sort of like massive growth. Okay. Now what do you have? Are you doing everything right?

Figuring that piece out, grow again. So we're seeing as like, sort of like our first plateau as a company here. , to, slow things down a little bit, take a little time to digest. Ee had a Q4, I believe it was Q3 or four. We acquired the 85 million in EBITDA, I believe in one quarter. And that's, that's a. That's a lot. Right. what I mean? So for us, it's like, all right.

And then plug in all the other things we're getting much better at our affiliate relationships, our retail team, our dress conser stuff, all that stuff to make sure it's, it's aligning doing correct is going to be our goal. While still acquiring an absurd amount of EBITDA per quarter. , but it will be a little bit less, I believe than years past, as far as the market's concerned.

And I think this is, and let me just have a little caveat here. Like I said, early on, I was good at sales. I don't do any selling, really anyone who's an MDS or any seller. I just see as a person that I want to help maximize their returns for whatever is they're trying to do. We're at a scale now where it's not going to impact me. If, I figured out a way to shave off a quarter-point of a deal to get it under three ICOs, wing.

It's not, I don't see the world that way. I just see it as a place where I'm going to give as much. Information from the information that I have that can be helpful to people. So I think that not in a fidget spinner beanie baby type way, but like, we're definitely hitting the first wave of the top market. Okay.

Maybe you can look at it as machinations of like cryptos history where you looked at when we entered the market to give you some perspective, our multiples were super low because there just wasn't active competition. Really what it was, was very disparate and it was like, I'm going to retire to an accountant. I'll buy this brand. It was literally that, right?

So we were institutionally first because of that, multiple sources were fairly low. , our debt was a percentage high at the time. But by the time multiple started going up and the competition entered, we had restructured our debt and because the multiples love the stuff we purchased, it allowed for a lot of forgiveness on performance. Right.

Because the math still makes sense. Okay. It's like, oh, well, here's your debt line? Here's your, here's your organic growth. Here's your overhead. It's still, it's still going to be very good. When comparing it to other potential investments, that a PE firm or investment house might look for look for. Right, and now we're looking at a scenario where everyone's like, oh, I want to be through SEO.

And they raised a shit ton of money. And they got some really smart people in some cases. And they just like, all right, let's just go do it. Let's put the pedal to the metal. They're starting with the higher debt rate lines. And they're starting at a higher, multiple. Which means their threshold for proof. Right, that Delta's is much tighter. So, and they're, they were building things faster than we were.

Okay. Right. So like, how do you have everything right? When you're going that fast. Right. , and they're buying post-2020. With the supply chain crisis and, and the COVID bp kind of ending. So all that being said is that, like, I think some of the fast money that entered the market, and by the way, I'm sure there's a bunch of companies will do great.

I'm not, not decrying anyone at all by saying this, but I think there's going to be a shake of the market multiples can't go up forever because the math stops working. And investors will be like, I'm not investing like that. Approve it. The point is coming for everybody. All right. You bought all this stuff. Can you grow it? Can you manage it? Can you deal with it?

And this first wave gold rush. I think the bubble is going to burst to some extent in the market. We'll reset it. We'll reset to where we were when we started this thing in 2018. No, absolutely not. But it's going to have to like the, the economics have to make sense.

And so whether you are on our side looking to buy from sellers or your sellers looking to sell to buyers, it's really important that you look at the perspective of the world and the environment of what's your what's your other side is. Right. As to say, like, if I'm looking to sell, I need to think about like, well, where's this market going,? , and there's always this gap.

There's actually a good way to explain it is, is like, there's this some relationship responsibility gap. So someone did a psychological study. It was like 2000 couples and there, and they're like, all right, out of the, two of you, who's responsible for most of your day-to-day activities, chores, whatever it was across all those domains in the household.

And what was funny is both men and women registered themselves as being like 60% responsible. Right. So there's this bias against our view of the world and that applies in this sort of like give and take of a seller and buyer market. Yeah. And then people get anchored to like really stupid stuff. We know that sort of like the, the sort of like machismo that can be in our world.

And people want to say that they got the best multiple. No one wants to say like, yeah, I sold my business. I kind of got screwed. That's a very rare thing to hear. Right. So really, you have to anchor yourself to a likely reality that the asset that I have really is as valuable as I think it is.

Estimating Brand Equity

[00:38:51] John Hefter: 

Does my brand really have real equity or is it just important to me? I've had people come up to me and be like, no, dude, my umbrella has a following now. It doesn't have a no. Right. So it's, it's figuring out the reality and then playing, playing your cards. Right, not, not being too greedy to be like, all right, well, multiples have gone from, I'm making this up, like, two and a half X to five X.

I'm just going to wait until it gets to eight X to sell. Right. Well, what if that market collapses then? Where are you? What if the buying power of these aggregators goes down by 50%? Then where are you? , we now, like is, is the long-term desire, really? You, the, the best thing for you to do. And if you don't think that you're likely to fall victim to such things, just look at other markets and how people deal with them.

Yeah. Most people like crypto and crypto environments, a perfect thing. Oh, it's 64,000. I'll just wait until it's a hundred thousand. And it probably will get there one day, but in the meantime 

[00:40:01] Nick Shucet: 

you don't have 40, 48 or 44 or something, whatever it 

[00:40:04] John Hefter:

You didn't put a stop-loss in there to capture some of your, like, to capture some of your earnings there. So yeah and again, I could be totally wrong. I don't have the future ball. Yeah. I don't have the magic eight-ball, but, I think it's coming. Some of the other signs are like Getting calls from people who work at other places. If it remains to be seen, but it's something that I'd be really aware of.

You're never going to time them perfectly but you can avoid making a really bad timing decision. 

Do Not Rely on Fictitious Multiples

[00:40:44] Nick Shucet: 

Yeah. And I think on the seller side, I mean, it's important to know like why, if you're hanging on, like, why are you hanging on it better not be because you saw a couple posts on Facebook. That had like 12 X multiple. And if that's your why, then you're not standing on anything strong, it's gotta be, you believe in the brand or, you've taken a look at the niche and it's got more to go or you just want to be stubborn and you want to hold on to it.

Like, even if that's your, why, that's better than just kind of being anchored to something you saw out in the middle of the no out and out of nowhere. , and another thing is sometimes it's just like, Hey, I've launched 15 products. So my EBITDA will be much lower this year, but any of the smart aggregators can work on a deal that will get you paid for that upside.

Understanding Your Product’s Value

[00:41:38] Nick Shucet: 

Do you have any advice? Like what, what, what can sellers do to kind of just prepare on, on there and when, or maybe do feel a little more secure about the decisions that they're making?

[00:41:47] John Hefter: 

I mean, for me, understanding what's tenable for you in a deal is number one, this is, this is what I want. This is what I'll take. And this is where [00:42:00] my deal has to fall into for me to say, yes, I think that's, I mean, it's a really basic thing, but it's a really good thing too, to understand, to consider what things you are flexible on to make your business more attractive to potential buyers.

Right. Hey, I'm open to a long-term earn-out, I'm open to continued management. I have, a pipeline of products that I could set up and do those, do those setups for launch after I sell like all those potential advantages, right? Like I will understand at that very moment, what my fair market value is, understanding what you have.

Just again, just because you love your brella and you think it's the best thing since sliced bread doesn't mean the world thinks it's a real brand with massive potential, right? That to me is like those, those basic levels of understanding are massively important. Understanding your books, and being realistic with your expectations based on previous performance.

So if you had a. One time marketing event, we just had one like a randomly on drew Barrymore show. She just pitched Angry Orange without us doing anything. She just actually liked the product and talked about it. Right. So maybe we'll be able to take that clip, run some ads for two months, and sell $200, $300 where the product. But that's a one-time lift like that won't be that won't be a long-term sustaining thing.

There, there was all this stuff with COVID there's, your competition getting suspended. There's out of stock for competition and you were in there, all this stuff, right? Like, be realistic with it. Don't try to oversell your thing. Cause it'll just come up and diligence be like, this is what I want. This is what I'm willing to take. This is what I really have.

Right. And this is why I think this value is, is here. And then listen, when you get feedback from people who are on the buying side. Is there going to be much more dispassionate about what you have and that's their job, but that will help you sort of set a realistic reality. And again, when, when a deal is good for both sides, both sides should feel like they've kind of won.

Not dominated, but kind of one. And that's where, that's where the, the happiness factor sort of comes in. 

How the Million Dollar Seller Community Helps John Hefter

[00:44:27] Nick Shucet: 

Nice, man, I like it. I think the way you laid it out, can kind of prepare you for whatever pops up along the way, and then you have your standards to fall back on. So yeah, I like that, man. , I think that's great advice and it's like, it's, it's. It's something people probably have heard and they know, but it's like those things that a lot of us kind of skip over, I think, is we just forget to do something as simple as saying, Hey, what are the five top things I want to get out of this deal?

We try to keep it all up here. For whatever reason, you know, it doesn't happen. And then we kind of lose sight of it. , so that's great advice. , well, John, I know we're getting close to the end of our time here, man. I want to wrap up and just kinda talk about, like how the community has helped you, throughout your journey and how that kind of landed you up with it with this relationship.

With MDs and, how that's working out for you and for thrash SEO. I think the great thing about MDS is that it really does a great job, of blending our personal and business lives where, it kinda just seems like it doesn't really seem like a business, right? Like we're out just, just having a good time enjoying what life has to offer. So yeah, man, like how has community helped you along your way, along the way, and how are you continuing, continuing to leverage that? 

[00:45:52] John Hefter: 

Yeah. I have a friend of mine who's done really well and sort of similar space to ours, but more, a little bit different. And, he said, one of the things I love about, my work is I get to go around the world collecting cool people. To me that's been one of the greatest joys of this journey is I've literally done that. Right. And when you surround yourself with people, who've had success.

It doesn't always be God's success, but it certainly increases the potential of it. , and when you get people who are, have a threshold of success where they're no longer too afraid, afraid to share information that can be useful to others, all the better. Right.

So when we can share our star, our suffering and losing stories, someone else can learn from it before they screw up and do something we did, or, they have tips for us to help us optimize our business or get in a better position. All those things are wonderful. They actually, bring me real authentic joy when I can help someone do anything to make their business better.

I know that eventually, that will lead to my reputation being good and, and, things coming our way. But for me to have that, And also when you're, when you're in small companies, like a lot of MDs sellers are, you need a network, you don't have 400 people at your office, right? It's like you and your laptop. So without that sort of bond and ability to connect with other people, life can be a little bit lonely.

For me, things like MDs offer, a sort of a home away from home in some ways, right? And something to look forward to. I always love that in life, I was like having a planned trip. It's not really about the trip. It's just like I have something that's going to be interesting in my life coming forward, and, that to me is, something that has real value. 

The Best Business Advice John Hefter Ever Received

[00:47:52] Nick Shucet: 

Yeah, man. I love, I love the group as well. And having all these great events to look forward to is, is just, it's just such a good feeling. Like you said, it's, it's, it's not the event itself. It's I mean, the events are great, but just that thought of like, Hey, I'm going to get away for a little bit. And I know I'm going to have a good time at an amazing place and hang out with some great people.

Like all the, all the stuff that you. Is there, once you go to a few events, it's going to be there. And that's a good feeling. , and I'm glad our paths have crossed. , like I said, I've, I've had the opportunity to hang out with you a few times and it's, it's always been great. And as well as Brandon, from as well, and I'm excited to meet more of the team also. For sure it did. Yeah, oh man.

Before we wrap up, I just got a couple of quick questions I'll ask you. Just meant to be kind of fun. Get your thoughts on a couple of things and then we'll wrap up. Okay. Let's do it. All right, man. So we'll start, we'll start with this simple one here. What's, what's the best business advice you've received that comes to mind?

[00:48:58] John Hefter: 

Best business advice for me, I mentioned it earlier in the show, but if you want success, you have to not care about it. , a couple of things that come from that right is like the first one is the sort of hero's journey starts with the fool. If you're going to do anything new and disruptive and interesting and special, you're going to have to be very uncomfortable.

You're probably going to do things that are very stupid, but you have to have this sort of positive delusion that allows yourself to, to still be optimistic. Right. And, and that to me is that optimism is not necessarily caring about success, in a weird sort of way. If you get obsessed with it. The idea of just the outcome. , you're going to drive yourself nuts.

You're going to be too conservative. , you're, you're not going to be creative and free and, and sort of happy. , so for me, it's, it's, it's all that sort of stuff wrapped up in there is be positive. No, you're going to screw up 80% of the things. Keep going. and eventually, you'll find something that, 

Normalizing Disagreement

[00:50:02] Nick Shucet: 

that works. I love it, man. I think, you touched, on some great things there and, I actually have a piece of advice that you've given me, that you gave at an event actually. That really stuck with me. You simplified something in two words, that has been very difficult for me. And I think a lot of other people, and you said normalizing disagreement, thing I heard you say.

And I mean, that, that impacted me in, in business and in my personal life as well, just like somehow growing up, I got it in my head that I shouldn't, it disagreement was uncovered. For whatever reason. Yeah. I would kind of shy away from it, and, now I've just looked at it differently.

[00:50:47] John Hefter: 

I always think of something. I believe this was Jordan Peterson who said, this is like, problems can sort of be like a lizard in the corner of your room. And if you ignore them one day, they'll grow into dragons, and you won't be able to be, won't be able to deal with them. I think there's something really real to that, particularly in interpersonal relationships.

Yes. If you're just harboring resentment and keeping things in and not addressing regular conflict, then you'll have an explosion. And things will be, and relationships fall apart from stuff like that. 

The One Thing That’s Working Well for John Hefter’s Business Now

[00:51:18] Nick Shucet: 

It's going to get out one way or another. It's going to show, for sure. Yeah. Great advice, man. Good stuff. , what, what do you guys feel is working for you right now in business? I mean, whether it's like specific to Amazon or just specific to running a large business, what's something that comes to mind that's working well for you guys right now?

[00:51:42] John Hefter: 

Surround yourself with smart people who enjoy solving problems, because there always be a lot of problems to solve, and be malleable with your expectations and your vision. Don't be too stubborn things change. You've got to adjust to the change. 

A Popular Opinion John Hefter Doesn’t Agree With

[00:51:59] Nick Shucet: 

Right on. I love it. All right, man. I got one more for you. What's something you hear often on the internet, whether it's business advice or personal advice? , that you don't really agree with that you've kind of had this experience and you think it actually plays out differently. 

[00:52:17] John Hefter: 

Yeah. For me, like, the way that people present themselves in public or online or in business meetings is so often detached from the reality of who they actually are, or the optimal way to communicate with another human being. So one of the things I like to do whenever I'm in a serious engagement with anybody, is to have fun.

Yeah. Is to go the opposite direction, too, to use as little corporate sort of gobbly goop, speak that everyone else uses to actually search for her, to find, places where you can. Enjoy each other's company and get to people, get to know people on a real personal level, as opposed to keeping things super stiff.

What found is that we sort of went to this wave of, I think it's, it's, the pendulum swung way too far in the stiffness, this sort of like conservatism through political, correct. It's in some regards, right? Like where the pendulum in the eighties was like, I'm really hyper-religious now mothers who were like, you can't play video games, you can't listen to this kind of music.

And it was sort of that. And now we've swung to this, like, be careful with every single word you could say, because whatever word you say could cancel and ruin you forever. Yeah. Both of those extremes are not good. And like, people want to have legitimate human connections. Yeah. They want to enjoy other people's companies. They want to be relaxed and other people's company.

So can you create a positive human connection with people and not take life? So God damn seriously. Yeah. In general, that's the other piece to me as well. Like, take your goals seriously, but not the journey in your life. [00:54:00] Spend time to enjoy it. Be relaxed, try to make as many positive engagements with the world as you can. , as you move forward in this thing and you'll be a happier person for it. 

John Hefter’s Icebreaker Question for Connecting with People

[00:54:10] Nick Shucet: 

Nice, man. I love it. That's a great culture, a great attitude to develop before we, before we jp off, do you have like any like questions kind of like icebreaker questions that help you kind of like cutting through the crap and like, and get to know someone a little bit, whether you use it in hiring or, whatever the case may be.

[00:54:30] John Hefter: 

My strategy and it's on a case-by-case basis, this is, I will find something disarming and hopefully very humorous. Okay. That is, that is also maybe like, outside of, the sort of polite norms, to open up a conversation or to,,, engage with people right away. So I, I can't give you, I can give you my it's probably off, off this one. I've said some very, off-color things and very serious meetings and they've worked super well for me.

Let's just put, let's just put it that way. Right. , so, for me, I actually, I found that I used to wait tables with, at the Beverly Hills hotel, like way back in the day when I was just out of college and I used, I waited in like every famous person ever, I was bartending too. I tried to like the super stiff, polite approach. And then one day I was just like, just screw it.

I'm just going to be goofy and fun and enjoy myself and whatever and, and not take Osos seriously. And what I found was, That all of a sudden my gauges with them improved greatly. And then I brought it into every other phase of my life. I'm talking to investors and I'm talking to potential sellers. Like, can we have a laugh, can we enjoy this thing?

Do you really want to hear a spiel about how amazing Razu is? And all of our metrics are what's going to actually close the deal. Does that work when you're trying to get a girl to go out with you? Right. You'd be like, I have $7.8 million in my bank account. Maybe that maybe that works out at all. Do what I mean? But like, the, the 15 other things you could say, is that really how it works or is it something else?

So is there, is there a little Schwab V joy to life that you can attach to? So anyway, I don't know if that answers the question, but that's kind of, and 

Initiating Unique and Authentic Connections

[00:56:18] Nick Shucet: 

I think it kind of touches on something special about the unique ability that, that you have. And some people have the ability to kind of just assess any situation and judge, and, and pick up on the vibe and what someone's going through. What may or may not. Work or should or should not be said it's special when you can accomplish that in a unique way with each different person that you interact with.

It's hard to explain that, right?

[00:56:48] John Hefter: 

It is a feeling it's a simple way. If someone's looking for, a way to, a pathway to start to it, you can always be self-effacing and make fun of yourself. If you consider yourself clever and you do it with warmth, you can make fun of others too. Yeah, right. , so if I was meeting an investor and he was wearing a Patagonia vest, I might make a joke about how that's like a uniform for douchey investment bankers, but you're not that way at all.

It's just sort of like that little, that'll get a chuckle because they know it sorta has some truth to it. And like, and then, then all of a sudden, like, all right, well, we're, we're. Right. We're at this point of actually being Hans together.

See You In Austin

[00:57:26] Nick Shucet: 

Yeah. And great things can be accomplished. I think when you break that ice and get comfortable and have a common goal as well. Right. So it's a great way, to get things done. Totally, man. Yeah. John man has been great chatting with you. Thank you so much for coming, coming on and taking the time to speak with me, man. I really appreciate it.

And I'm looking forward to seeing you at another event soon.

[00:57:49] John Hefter: 

Yeah, man. I'll see what I think Austin is next month, right?

[00:57:51] Nick Shucet: 

Yep. Austin is next. Yeah. All right, man.

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