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Then you'll want to know about signalkit.com, it expands the utility of all th ose business tools you're already using. Signalkit.com very plain and simple, th ey make your 37signals tools more powerful. Do you ever wish you could see your Basecamp to do's across multiple accounts al l on one page or would you like to get better notifications of your campfire cha t rooms or maybe use Campfire as a way to add live chat support to your website? Well, check out some of the products being created by SignalKit, a suite of too ls designed specifically for 37signals users like you. Let me give you that webp age again, signalkit.com. Next, after he sponsored hundreds of Mixergy interviews, if I ask you, "Who is S cott Edward Walker," what would you say? The answer of course is the lawyer that specializes in helping startup founders like you. I've known Scott for years an d have privately recommended him whenever a founder asked me for a lawyer. Scott Edward Walker of Walker Corporate Law. Finally, if you need a phone number that gives you unlimited extensions, who do you turn to? Grasshopper.com. If you have or you need to have your voicemail tra nscribed, who do you turn to? Grasshopper.com. If you need a toll free number, w ho do you turn to? Grasshopper.com. It's the virtual phone system that entrepren eurs love. Here's your program. Andrew: Hey, everyone, my name is Andrew Warner. I'm the founder of Mixergy.com home of the ambitious upstart. And you guys know what the mission is here, right ? To bring entrepreneurs on to talk about how they built their businesses, to sh are their stories, so that you can pull out the ideas that apply to your busines s and go out there and build you company now based on them. So how does and accident lead a founder to earn a million dollars in sales withi n a year? Joining me is Lou Doctor, he is the founder of BikeTiresDirect.com, th e leading bike tire seller in the country. You'll hear about the accident that l aunched this business in this interview and how the company that accident spawne d took over his garage and then that company took over parts of his kids' lives. You'll also hear about the other sites he owns including, golfclubs.com, darts. com, billiards.com, and pooltables.com, a lot of great generic names. Lou, welcome to Mixergy. Lou: Thank you very much.

Andrew: So if I go to BikeTiresDirect.com what am I likely to find and who's the average customer who comes to you? Lou: Well most of the customers that come to BikeTiresDirect first of all are at least savvy enough to be able to change their own bike tire, so that's a som ewhat exclusive group of cyclist. I think our core audience is probably a road b iker as opposed to a mountain biker or a commuter. I think they're probably peop le that maybe the first time they go to replace the bike tire on their road bike , they're very surprised on how, number one, how short it lasted. Bike tires on road bikes often last only last about 1,000 miles and that's not that much ridin g, once you start getting into road biking. And they're also shocked as to how e xpensive those tires are in the store. So they probably walk into their local bi ke shop and don't realize that they're about to spend $60, or something like tha t, to replace their bike tire and that was really the genesis of the business. The same thing happened to me ten years ago. I got into road biking. I found how expensive the bike tires were. And a group of guys in my town decided to find

a bike shop in Europe, even, before there was much Internet searching going on. And we found some guy in the U.K. that was willing to sell us tires at a discoun t and that's how we started bringing them into the country. Andrew: Okay. I want to come back to that story in a minute, but let's talk abou t where we are today before we go and discover how we got here. How about revenu es, what can you tell us about the size of revenues at BikeTiresDirect.com, and maybe all the other businesses too? Lou: Sure. The bike accessories business actually runs a few websites now. So what started as BikeTiresDirect also includes a site called WesternBikeworks.co m and also a generic site called BicycleTires.com. And the collection of those t hree did a little over $9 million in sales last year. Andrew: Wow. And what are the other businesses? Why are they separated out? Lou: Well we always thought that it was possible that some buyer would be int erested in only one sport. Maybe a company in the bike business might not be tha t interested in cue sports or necessarily in golf, which is the other categories we're involved in. But we do share some common elements of the business in term s of the software platform and the marketing efforts. So they're separable, but we're also trying to get synergy between them. Andrew: So, I ask entrepreneurs all the time about their revenues. I was going t o say many, but most actually reveal their revenues, some say no, which is fine. I'm wondering, as an entrepreneur yourself, what value to you get out of listen ing to other entrepreneurs' revenue numbers? Lou: Well I think that once you hear the revenue you have at least a reasonab le sense for the scale of the operation. So I tend of companies as having phases . I mean, the first million dollars in some ways is the most challenging, but al so a great sales guy can single-handedly sell a million dollars of just about an ything. And similar to that the $1 million to $5 million dollar range, that's pr obably of few people doing a good job about what they're doing. And I think once you get into the $10, $20, $50 million range you're starting to talk about how an organization functions rather than just one person. Andrew: I'm actually writing down that quote that you just said about how a good sales guy can do a million dollars of virtually anything, so I can come back an d ask you how a good salesman can do that. What else do I want to know about where we are today? Oh, I know what, how much did you bring in an outside funding to run this business? Lou: Well we funded it all ourselves. The BikeTiresDirect business, as you kn ow, started in my garage and has essentially been self funded so we were able to reinvest what would have been profit. At the end of each we left the cash in th e company and we've managed to build that up to a business that has over $3 mill ion in inventory. Andrew: Oh, wow. So I know that you had a great track record in business before this. I kind of assumed that if you didn't take outside funding, which I know fr om our conversation before this interview, that at the very least you brought in a lot of money from your past businesses and invested it in this company and it sounds like you're saying no, you did not. You just bought a few tires early on . But really, less than $5,000? Lou: Yeah. I mean, I will say that we didn't draw salaries out for a long tim e. So the effect of that was to effectively reinvest by virtue of not taking cas

Horizon Partners is how I connected with y ou. but I think when you're starting y our own company a single or a double is perfectly acceptable and you don't want to take risks all the time to risk the company in every quarter. But that company was essentially self finance through its own cash flow. you can almost always get something done for them. Made a fair amou nt of money doing it. and I. but mo st often we try to find bootstrap companies. kind of. Andrew: True Vision. but it wasn't really a homerun because of th e amount of venture money we used. So we help entrepreneurs se ll their companies. enjoy doing the same thing all over again. they're worried about other things of course. helped a lot of entrepreneurs achieve liquidity. Andrew: Lou. and growing that for seven o r eight years. which is the one that did the best for you personally? I s it Locality? Is it Roster Technologies. Probably a company which is less likely to be eCommerce and more l . Can you tell people what Horizon Partners does. Andrew: So essentially the kind of company that you're running now is the type o f business that Horizon Partners likes to partner with and sell? Lou: Yeah. Now I'm involved with Horizon Partners and Sand y. basically. but I call myself a recovering eng ineer. but my roommate from college and I started a company early on that was venture backed and we successfully gre w it to about $20 million in sales. it's allows us to buy homes and whatever. always had singles and doubles. Lou: Yeah. but once you have a great company. the first company. I' ve got the whole timeline here on my screen. And we found that those tend to be very successful and excit ing companies and they sell well. We occasionally do companies that have venture money. So I'm an engineer by training. So I'm dying to dig into how you built this busine ss. And I kind of feel as though some of the Silic on Valley mindset is very homerun oriented. This is the kind of interview that I seek out that 's hard to find because there aren't a lot of success stories like yours. but i t didn't set us up for life.h out of the business. Stan. I think was third. And had kind of an advisory in vestment bank. for those that didn't see th at interview? Lou: Yeah. I would probably say Arbor Advisors. if the owner of it is willing to sell it at a fai r price. And then I just continued to do a bunch of startups and just never had a homerun . entrepreneur backed and co ntrolled companies. this is a dream. And I enjoyed helping people get liquidity and do transactions as oppo sed to really necessarily operate the businesses. When you take venture money those gu ys are looking to hit it out of the ballpark. So when the company was ultimately sold it ga ve us a nice kind of head start. That was a point in my career where I really thought about what I enjoyed. And th en the ones that are out there are very quiet they're not ready yet for the worl d to know about them because they're worried about competition. The challenge is finding great companies. Maybe we can give people just a little background on what you did before. In a nutshell it a sell side M&A firm. Andrew: Of all of them. Mike Firmage. But is there a way for you to conde nse what your experience was before this business into maybe one short answer? Lou: Sure. Andrew: Sandy was a past interviewee. Cory. Lou: Yeah. but also helped a lot of people in terms of exiting from b usinesses that they had started. So my background is electrical engineering. starti ng the investment bank with my partner there. They've all done well.

so tight. it was getting a bit out of control. sell these on eBay and I have $300 tied up in the box. but it could be an eCommerce c ompany and we have sold eCommerce companies. What happened? Lou: We basically had a group of cheapskates that were buying tires from a bi ke shop in the U. "Nate.ikely to be a software platform or a SaaS bender.K. So you see the economics of those comp anies improving as they get to be several years old.000 orders from th e parking space in my garage. at least in our own collection of companies where we're shooting for $50 million or so before we start looking for a buyer. You can keep anything you make above t hat. I'm wondering if. yo u tell me. And as an . . When they're small they typically do n't sell for a fantastic evaluation. And then over a peri od of years you can turn them into steady customers and they're more profitable and there's less expense associated with. and we buy products and we sell products and we have warehouses and p eople that pack boxes and stuff. became 500. there's some recognition in what I'm saying. in eCommerce? Lou: I think that has a lot to do with it. Andrew: Okay. made $50. Andrew: Why less likely to be eCommerce? Lou: You have to grow an eCommerce company pretty large. and eventually we had 18 whe elers pulling up into our driveway dropping off pallets of bicycle tires. this sounds like such a beautiful story. you wanted to find cheaper tires onlin e. So going back to the story. order me ten more too. next time you' re ordering tires. for $350. often that's not the kind of company that sells for a high premium." So I handed the box of tires to my 12 year old son and I said. So I do think that when people look at ou r company. I'd probably say that there's a bit of discrimination in America against busi nesses that require working capital to grow. And my two kids at the time by then were 13 and 11. What you find in eCommerce. "There's got to be a better way. a million dollars worth of product in the first ye ar. well. You found them and something happened and I alluded to it in the intro. "Dad. "All right. well. . I see that smiling. why is it that eCommerce sites can't sell for as a multiple? Lou: That's a good question.' So then 20 tires became 50. $30. Andrew: So if that does happen. was it just that simple or was there maybe an intention to sell this . they shipped 10." And that was almost ten years ago." And said. He sold the box of ten. eventually. I think because they're working capital intensiv e. $50 million plu s in revenues to allow the founder to exit with effectively enough money to reti re on. became 100. he was 12 years old at the time. and said. There's a bias toward companies tha t are just intellectual capital based. And then one day we got a box of tires that were the wrong c olor and when I went to the post office to send them back to England the guy wan ted $50 to ship the box. Andrew: So. ECommerce companies don't sell good. especi ally companies that are buying traffic through Google clicks and Bing or whateve r. Lou: I think there was a point at which my wife and I had a conversation abou t my use of child labor in doing order fulfillment and she felt like maybe we sh ould scale the growth back a bit. I said to myself. Andrew: Is that because margins are so narrow. is that early on in the company's life you're spending a very high percentage of your revenues bringing customers for the first time to your business and eng aging with them and doing that first transaction with them.

We used PayPal for a payment system because of our eBay connecti on. is if you can m ake yourself big. Andrew: So was it on the second sale that you saw your son going back to eBay an d bringing in money that you said. said.m. "Th is is a real business"? Lou: It was probably four or five months.S. "Hey. I've got my two kids in the garage and we want to buy a million dollars worth of your product. . eventually the manufacturers start to respect the business that you're doing. We were in the Bay Area. if we had gone to them at the beginning and said.' So we eventually got to the point where my wife walked into the garage one morni ng at about 7:00 a. We did eBay for quite a while. So I think it was that genesis of grey marketing transitioning to legitimate mar keter that gave us the start. we have to do more. I'll call it. And then I think the other element to it is." And she walked into the house and said. landing page design. you know." And so we eventually moved the i nventory up to Portland.S. say the BikeTiresDirect website my business partner in that was a long time friend also a classmate of mine at Rensselaer Polytechnic and he's done all the software behind the website. if people want to buy the product and we can buy it and we can sell it at a profit . as grey marketers. and my 11 year old was in tears.' Lou: Yeah. in San Francisco. "This has got to get out of the garage. We'd like for you to start buying from us in the U. We really can't control that. efficient fulfi llment. And in our case. But the lesson i n all of that. if yo u visit. the shopping cart. I've got to get in on this. Oregon.S. even if you're not built on a firm foundation. It would be ba sically having a brick and mortar retail store where you don't control your stor e. We reincorporated and started doing business out of Portland. And that was just when Overture was getting started with. I think if you really drill down. People that outsource what they think of as a commodity. It's like. Andrew: How soon after your son's first eBay sales of the tires did you say. And when she asked him wh at was the problem he. it was pretty bad.entrepreneur that was just not something I could relate to. all of a sudden we were like a target account. what are known. which is a little bit like the diapers. I did it myself." they pr obably wouldn't return my phone call. "We're not going to be able to ship all t he orders before we have to leave for school. essentially. conversion optimization. So the thing that we've gotten really good at as a set of companies is this pay per click. This isn't just my son's side interest anymore. in tears. There was no sales tax in Oregon. what we there at the time was an arbitrage opportunity. but then we put up our first website and made out a front page. "Hey. "We know you're sourcing your product in Europe." And so in a sense. We were effectively. "Hey. that whole chain of people that start. And so I think it would be very difficult to b e a successful eCommerce company without your own IT capability in-house. But by the time we were doing a few millio n dollars a year in business. I think are kidding themselves in terms of their ability to grow. after two or three years they started coming to us in the U. saying. buying. Oregon. at t he time and we moved the business up to Portland. We started going in there buying the key words for the products that we had on the website and that was really the thing that took off. keywo rd buying. We were buying product from legitimate dealers in Europe and we became effective ly an illegitimate dealer when we sold that product in the U. in the Google chann el and end up wanted to buy a product.com story.

com so it was an URL that was av ailable at the time. have a what's called MAP restriction. dynamic pricing too. in the bike tire business yo u put a bicycle tire in your shopping cart the website will suggest a matching t ube size to go along with that tire. "Hey. "No. basically. And then I think we're entering the world with very much. Let's try to do both. .000 a month. Whereas. Lou: Yeah.Andrew: Why not? What. You can stitch software products together to do it. what did that site look like ? Lou: Well that was the first BikeTiresDirect. I mean. Part of me wants to hear the story behind the business and another part of me says." And then you look at this rang e of manufacturers and maybe you have 300 brands and everyone has a different se t of rules with regard to what you can and can't do in the presentation of their product. Which is to say that you send your existing customers a discount c ode and they get a break when they come to the site. Andrew: I see. you're pretty much restrict ed to one form of presenting those offers. Andrew: I see. but often the sites look like they're all stitched together. An off the shelf shopping cart would probab ly have a tough time knowing the difference between a Presta valve tube and a Sc hrader valve tube and the different bell plates and stuff. we find in every vertical market that we're in. I'm going to try to fit every single thing I can in today. Lou: So not too big. What do you do on dynamic pricing today? Lou: We just do a lot in terms of trying to optimize the offer. if you have an off the shelf cart. "You can show a lower price if it's added to the shopping cart an d the customer manually puts in a discount code. you can offer a lower price when that product gets added to the customer's shopping cart. And on that FrontPage website we probably started doing say $10. And so. just the abil ity to go in there and tweak that merchandizing platform is important. I'll call it. sure." I know you do a lot of A/B testing. And so. Andrew: So how big did the company get in the first four months when it was just doing eBay? Lou: On eBay I think we probably got up to maybe $5. we sort of doubled our sales as soon as we went to a website versus just the eBay sales. We really didn't know much about domain names other that th e fact that we wanted to find something cheap. So in effect." Other manu facturers say. I want to know about the A/B testing that he does.000 a month in sales. Andrew: And then when you launched you own website. We have a loyalty program w here 10% of every purchase you make is good toward a future purchase and keeping track of all this customer account information and managing a customer loyalty program is also tough to do. Part of what you're watching here is a wrestling match in my head. some manufacturers will say. For example. All right. and I wrote down a note here to find out about the Google channel and what you've learned about taking a customer from a search to a sale. Minimum Advertised Pricing re striction. for example. can't an off the shelf shopping car do that you can that influences the business so much? Lou: Sure. Most products . Andrew: Okay. there's a lot of market specific customization. if you can control that envi ronment you can customize it for each manufacturer's restrictions.

I mean. helps you grow still. before others discovered it. eve r got into the business. Now that busi ness has over 5. website helps you grow. so it was a question of. yeah. that's it. I mean. And so.Andrew: How did you get so many customers within such a short period of time of launching? Lou: I think part of that was just where eCommerce was ten years. but add a second type and there's a whole new group of people searchin g for that one. it was a bit of the right place a t the right time. The b usiness was basically growing on its own at that point. All right. Gross margins in the business have always run around 30% and so we were spending about 10% of revenues on traffic acquisition and we would spend r oughly 10% of revenues on fulfillment and customer service and technology. you double your business. Andrew: Okay. I think a business like ours.000 products. For us it had to do with expanding the product offering. Amazon was selling CDs and not sell ing bicycles tires and so you didn't have these one-stop shops. the business just grew linearly because the search volume effectively for one tire might be limited. So eBay gets you started. Andrew: Okay. And so what we found is every time we added a bran d or we got access to a new product line from another manufacturer. As soon as we set up the website we tr ied to figure out this keyword concept. you w ere essentially bringing in less than 10% net margins. you did. So you launch a website. right? Lou: There was a lot of that. "How do you get on Yahoo? How do you make it so people tha t are on Yahoo looking product can find yours?" And that's were Overture came in and that was prior to the Yahoo acquisition of Overture. Right? Including shipping and everything else. And so they were doing pay per click before Google. addi ng more products. Do you remember w . you had to have perseverance even as a shopper. Andrew: So what I remember from the numbers in the beginning of the story. The large brick and mortar guys hadn't moved their inventory online and so we tended to have spe cialty shops and things were hard to find. of course. $5.000 in revenue just comes in? You're nodding. It was about the same time. The search was just Yahoo back then. So a lot of the growth of that business just came from the offer ing expanding. you r online shopping options were much limited. Lou: On each order? Andrew: Yeah. Andrew: So was it essentially that there was such little advertising that you pu t your site on and poof. I think if it's doing between 5% and 8% EBITDA margins is probably running fairly well at the growth rate that we're growing. And so. 40% a year. There is nothing like a tailwind for a business. we de finitely had that. In reality those percentages always cre pt up into the make 10% category. At the be ginning we had literally just one or two different kinds of tires. And t hen we would hopefully try to make 10%. Andrew: I see. in terms of different brands and products. is the next ste p to buy ads and the business grows again still? Lou: Yeah. And so. then was it Overture? Lou: Yeah. Lou: Yeah. I would say at the beginning we were more trying to keep up w ith the orders than we were trying to figure out how to grow the business.

but it's just a painful process I'd have to say. we spend time just meticulously going through the ads and then whe n an ad group starts become poorer performing over time. I'll cal l them. We're so familiar to people in that market that our click through ra te are quite high so our per-click price is still in the $0. Especially Google's quality score metric and looking for your click thr ough rates. Even i f it's in the top it sometimes feels like it could be buried. Andrew: And you have your own internal software for managing this? Lou: We pretty much use the Google job. Andrew: Have you tried anything like Facebook or any other platforms? . Like we would think th at if someone was typing a search term like "Continental Grand Prix 4. I mean. Andrew: Really? Lou: Yeah. you're giving them that product.hat you were paying for a click back then? Lou: I think probably $0. and you want to eliminate all the other options. You're saying. $0. Andrew: Wow.25. actually at the beginning we tended to take people directly to a single product page. and that 's 90% of what we do today.000" that that we really all they were likely to be interested in. navigationally challenged when they come to a brand new site. So there are people essentially sis. Andrew: What would you pay today for a comparable word? Lou: You know.25 on average. they'd be happy. we try to figure out is it a pricing problem? Is it a page results problem? There are so many variables in there.' Lou: Yes. if they want to compar e them. Lou: Yeah. wit h the product that they were looking for near the top. Andrew: And then how do you make sure that they see the product that they search ed for is right there on the page and not have it buried within the list. Later on we realized th at a search results page was probably the most productive place to put them.20 to $0.30 kind or range. Andrew: So did you immediately take people who were coming to you from Overture to a specific product page and dealing with them separately and differently than someone who had come to your homepage or did that take you some time to learn? Lou: We figured that out fairly quickly. that's correct because I think what happens is people are. I would probably say that the PPC cost creep affects people that a re a new entrant into a business much more so than people that have been around a while. That in fact there was a desire to do some level of comparative shopping and your options were so limited when you landed them on a product detail page that it seemed like we were getti ng better results with a list of products rather than a single product. ironically it's not much different. We're only on Google and Bing so ds of our business through Google and interface and regular old people doing the monitoring the PPC campaigns on a daily ba the two platforms and we probably two-thir about one-third through the Bing platform. That's so counterintuitive. it's not as good as at least serving up some products initially that are probably reasonable alternatives to the product. I would assume that they search for a s pecific product. you do want to make clea r that there are other options and let them pick the one that want. "No. And no mat ter how much testing you do or how good a job you think you've done in helping p eople navigate.

Andrew: Wow. Lou: So we were roommates in college in engineering school and he was always the more technical one of the two of us. And I noticed earlier that there were a lot of generic names in yo . what technology were you built on? Lou: Literally FrontPage. I mean. right. Andrew: Did he come into the business while you were still building it in your h ome? Lou: It was already in Portland. Lou: Right. We get a lot more orders fro m iPhones off of these websites than I ever would have imagined we would have. Actually. which wa s an off the shelf PC shopping cart. So that's similar to what we're seeing. He was living in Seattle so it was a bit of an easier commute for him than it was for us from the Bay Area. And we worked together for many years. I don't know enough about each vertical market anymore to make those decisions. I ended up doing Arbor Advisors. I think the s ocial commerce business is still nascent compared to the traditional eCommerce. I was kind of the business guy and he w as essentially the technology guy. I've been taking a 100 plus orders a month off of iPhones and we're now spending some reso urces to try to make that a better interface and more customized to the small sc reen. Andrew: So up until that point. the PayPal buy button. really? Lou: Yeah. basically. And we moved from the PayPal buy button to the Cart32 platform and then when Jay took over the business he implemented a cu stom shopping cart. Andrew: Oh. Andrew: You mentioned that you had a partner and I didn't ask how you acquired this partner. Andrew: And how did switching from that to your own system impact sales? Lou: It was of course better. but I would actually that mobile commerce seems to be more promising than social commerce if we were to block them into categories. you know what? That's true in my life too. I think it's still early on in terms of its maturity. We're spending a little bit. We eventually moved away from PayPal and went t o a regular. So he's been the general manager. Andrew: And the sales were coming in how? Did FrontPage used to have a sales eng ine? Lou: We had. I've bought ma ny things on my iPhone even on web pages that weren't customized for my phone an d I don't think I've bought anything off of a social site yet.Lou: Yeah. In each one of these companies I've go t a general manager and someone who's responsible effectively for the website an d the product decisions and the buying. Some day that may be a meaningful revenue stream. Andrew: Okay. So you would do all of your me rchant processing effectively through PayPal. He eve ntually ended up at Microsoft. c onsidering the small screen size. we actually had a shopping cart called Cart32 for a while. He was retiring from Microsoft and I convinced him to become a partner in the bike business and run it.

I mean. Sandy told me a little bit about that story. What happens? . I don't know what's private and what's not so I'll leave it to you. So I am basically making payments now to him as though I was renting a store from him. Well I would say on that name and particular the bid ask spread wa s quite large. it's multibillion dollar m arket even just in America. he will benefit if we decide to sell the company before the five years is up. Can you tell m e about it? I see it sounds like nothing's private. And then what's the risk to you that you build this up.com. Andrew: How? I understand being at the right place at the right time. Andrew: I see. but not q uite big enough and then he ends up taking the business? Lou: Yeah. the monthly lease payments are not that prohibitive. Andrew: So. And that formula has been replicated. So I helped sell Deals. I essentially wanted to find something even bigger than cue sports and then I fo und the guy that owned golfclubs. And we kind of brai n stormed this idea. It's not discovering pay for click before its competitors are disc overing it. and a bunch of other names. I also own Golfclubs and Golfc lubsexpress. That's a risk I'm aware of. And I see how that would give you an advantage and let you grow so quickly. So at this point it's probably going to do close to $5 million in sal es this year and I think it's going to be a huge success. we did abo ut a half a million in sales and we practically did that in April in just one mo nth alone. about the wrestling. and he also didn't ha ve a website on it and I explained my story about how I'd built these successful eCommerce companies and 'golf clubs' as a search term is probably the largest s ingle eCommerce category. And at this point the golf business is off to a roar ing start.com and darts. helping peop le sell companies and occasionally I would get involved in the sale of a high pr ofile domain name. So it w ill have worked out well for him. We were open for only about five months last of last year. but giving him and equity interest in the bus iness.com and an alternative is basically launch those sites during the fi ve year period and maybe have to give up one of the three names. a guy in New Jersey.ur portfolio.com and Healthcare. but still have a company at the end of it. I ha ve to build the company up to be successful enough to make the purchase at the e nd five years or finance it through him for three more years after that. at the bir th of the eCommerce boom. but Golfclubs is entering a market that's already had lots of entrants.com. at least in sporting goods. so I started looking at the possibility of finding a sp ort that was busy in the winter and slow in the summer to keep the warehouse a l evel operation. I met a guy who owned billards. I was involved in the investment banking side. which I think I'm quite proud of which was that I came to a n agreement with him to lease the name from him for five years with an option to buy it at the end of the fifth year for his original asking price. it was far less valuable than that. He felt like the name was a seven figure plus name and felt that without a website on it. Why did you decide to go after th ose names? Lou: By accident. h e owned a chain of pool halls in Texas and convinced him to put up an eCommerce site on it by selling me the name. effectively. Lou: Yeah. but then the willingness on his part to finance that purchase for three more years after tha t. And then the bike business was always very busy in the summer but very slow in the winter. for t he name. And so wrestling the domain name from him for a deal and giving him some equity and investing money in the company to grow the busin ess is how we got into golf.com. He also has some additional equity upside in the company so that as kin d of a kicker for the risk he's taken. He got the value that he was asking for. like billards. his name's Nick Alexander.com.

but had ne ver actually talked to them. pay per click search. You said earlier that the fi rst million is the most challenging.999 and it was like boom. both of them said. we're probably s aving people about 15% to 20% over walking into a store and buying the same prod uct. they were shocked to find that they were basically doing business with kids. And that came so quickly. Let's go back and fill in the gaps here. you've got MAP pricing and maybe if you hunt around on the Internet you can find a disc ount code that saves you even more. 6. And when we finally met them in the hotel lobby. I think we had a pretty good se nse that we had crossed the million dollar mark as well. 'America's a great count . And then because we were sourcing product from Europ e we got to take the family to Paris to see Lance Armstrong win the Tour de Fran ce 5. it was all done via email and credit cards. All right. there were two separate meetings. I'm going to as k you about SEO and also SEM. we don't collect sales tax. but they still have to pay California sales tax. I'm writing notes on what to ask you about when we get to the section where I ask you for practical how-to tips. and meet our distributors. so you've got $30 worth of sales tax. three years in a row. on average. we ship every club for free. We were having a lot of fun I will say. Andrew: What was the celebration like or what did it feel like at home? Lou: I think it was just a typical day of trying to get the shipments out. more or less. So we kind of saw it like 9. So to start with.Lou: Well. we had bought a million plus from them. off the top. how to do it right. So if you're buying a $300 set of irons or something like that. you've got free shipping.000th order and we pr obably didn't have detail an accounting at the time to know whether in fact that was a million in sales. and 7. And I'll say one last thing about that. And my boys got a first-hand experience in the back of the post office. I draw this distinction because I think of the world as the eBay Channel. but because we so simple we just had our order numbers incrementing by ones. It really depends on where you start looking fo r something and if you start on Google then I like to think we have a good chanc e of putting our offering in front of you and hopefully converting you into a cu stomer. the Goo gle Channel. So it w as just a great experience. and s aying goodbye to the driver every night as he drove off the 18 wheeler. And again. So California customers could buy from Golfsmith or Golf Warehouse online. Do you remember the day when you hit that f irst million in sales and crossed that most challenging mark? Lou: I think that we remember the day we shipped our 10. So I would say. let's call it. like sorting stuff by state and loading up the truck. So if you start at the Google Channel. first of all being in Oregon and not having a nexus in California is a huge advantage. The post office used to let us bring the express mail bags onto the truck after the post office had closed. So they had no idea that they were talking to an 11 year old and a 13 year old at the t ime. I think in that one. because all of the big box chains have a footprint in virtually every stat e.000 orders. Andrew: It's just pay per click and search? Lou: Yeah. Andrew: Then how would people discover it? Lou: Again. is the first time we met our partners in Europe that very first year. And at the end of each meetin g. the Amazon Channel. We became the largest shipper in our town. like that's 10. Andrew: I'm going to come back.

Andrew: You know. no one is going to trust with their com pany unless they feel confident that you're going to do what you said you were g oing to do and give them a good outcome. If everything goes well they never have to call you. The y're both economics majors in college. keep work away from kids. But I think that the business to business relat ionships and just the people and the trust building. They find what they want on the website. He's graduating Claremont McKenna College this weekend. Your customers are often an an onymous relationship. as an example. I think a charismatic sales guy can do a tremendous job selling a product that may not be as good as his co mpetitor's product. and exchange rates. I probably developed a little bit more into it. and pay per click fees and stuff. Andrew: How? Lou: Well.' And so. I think as a business person. Andrew: I see. Like. He's got a job working at Bill Gates Investments up in Seattle as an analyst and his career in finance is launched and I'd like to think that part of that was s hipping that first bicycle tire that he bought for $30 and sold it for $35. what are the advantages of having your kids be in business that early on and keeping them in the business they way you had? Lou: I think it's helped them a great deal. I feel as though a lot of our growth. I try very hard to give everyone I do business with a fair deal and effectively exceeding their expectations for the transaction. You're supposed to keep work away from the fam ily. My oldest son. and markups and markdowns. And it takes some amount of experience to really live up to that. they're happy with it. cool. I think people were really in awe that the kids and a part-time dad helping out could grow a business that fast. I understand paying early helps. And then I think when you exceed their expectation. they buy it. So their exposure to that at such an early age. I think helped them. maybe even one on charisma. I think people want to do business with people they like. I fell in popular culture the idea of bringing kids into business is considered a problem. Andrew: Oh. How about another tactic. You're talking about things like gross m argin. This is Nate? Lou: Yeah. Andrew: What else? Give me some other tactics. How? Lou: Well I think in my own experience a lot business. And I think even in eCommerce manufactu rers are trusting you to be a well behaved supplier in the market. is there a way to be chari smatic on purpose? .ry. maybe with the excepti on of eCommerce at its outset. is the people to people business and I just feel as though eCommerce is different because it's really your supplier relationships that represent that people to people connection. and they're t rusting you to pay your bills on time. Andrew: I bet. the one that was really 12 at the time is now 22. I mean. a guy that's behind paying his bills is not going to get product that he needs if it's a hot product. You also said earlier that a good sales guy can do a million d ollars anywhere or in anything. if you pay your bills early you're going to get the first product th at they can ship. yeah. And are you that kind of a person? Lou: I never thought I was. they sen d you a nice email thanking you. I guess first of all if you move kids from another country they pi ck up a language incredibly fast. Lou. well certainly in investment banking it's v ery much a trust based business. their minds are like a sponge and I feel as th ough business is a language of its own.

I also feel like that's important to consumers. do you mean SEM or SEO? Lou: Well. but they're not getting as much volume. So I think in that case the credibility c ame kind of came with the name. you search for pool tables on Google.40 to be number two or number th ree and therefore the guy that's number two or number three may be making more m oney on every sale. I wish I could control my SEO position. I do a search. they saw. 'I'm willing to spend. we can defend number one. Sure. So. and so we've had to break into that. Golf Galaxy. but since we decided that that's not something we could ever control. they're not getting as much brand exposure. you may have to bid $0. Let's t alk about how a stranger becomes a customer and see if you can teach us some of the salesmanship that's involved in every part of the process. Andrew: What does it mean to defend the number one position? Obviously I underst and that it means you want to stay number one. honestly. "Well. How could we not be there?" And then we were a ble to get access to those products. We like to defend the numb er one position for a search term. So in our case we want to have a fewer number on terms t hat we can defend the number one position on.00 of gross margin in order to recover that $1. The golf business has a lot of c ounterfeit product flooding around. let's say. I think the premiere domain names that we br ought to the table got people to do business with us.com. Were as in the past. let's say "p ool tables. But I feel a s though if we start at number one.00 or otherwise the system doesn't work. I'd probably say. So you need to spend a lot of time looking at how people interact with the site coming off of a high volume search term and m ake sure that you've done enough testing to make that interaction profitable.80 for a click on Callaway driver to be number one and you might only have to bid $0.Lou: Oh. cost me $1. if you take a high traffic search term." All right. The Chinese are counterfeiting every top sel ling golf club and the consumer goes to a website and doesn't really know if the y're buying a counterfeit product or a real product so they have tended to go to brands that they felt that they could trust. Andrew: And when you say number one. right? I've got to monetize that visito r to generate more than $1.000 on Google or even bicycle tires on Google and you'll end up seeing BikeTiresDirect pretty prominently placed. I as customer might be looking for a specific pair of tires on Google. that' the next thing I wanted to talk about.00. So that click. Andrew: The Google Channel. That's probably not my strong suit. Take me through that story. So we'll search for a Conti nental Grand Prix 4. So as an example. Well let's use the tire example. we're mostly focused on SEM position . Were as. maybe.com we would have had a much tougher time. like for example in golf. Andrew: And when you buy the ads on Google would you say. we had been Joesgolf. Golf Warehouse. many of the manufacturers initially said we're not opening up anymore Internet resellers for our product. somet hing that's already in their town. we're number one. you have to figure out how to make money as number one. So the challenge really is. And then they went to the website . What happens when I search? What do I see? What do I search for? Lou: Sure. There are guys that realize they can make a l ot more money at position four or five. I think. with re gards to these eCommerce companies. but how do you stay number one? W hat do you do to defend it? Lou: Well. just because the people by the time they get to number four of five are kind of exhausted and ready to buy. golfclubs. . the next time you go looking for something we're probably a company that you're going to give a tr y to.

I do feel like the qualities metrics and. but I also feel like there are factors where I feel like Google. I found that that doesn't usually work.' and come up with a really big number and trust that Google is going to take j ust the right amount in order to keep you at number one? Lou: Yeah. that fact t on product detail pages m Andrew: So defending first place doesn't mean having a person who watches those numbers every day and make sure that you're bidding the right amount. you know. I think. but it effectively. where people come to a pa ge that doesn't have one offer. Lou: That's correct. what I'll call. I think it gives you. on the SEO front as well. not necessarily being in business for an extended period of time is what you're saying. I think that what we do is constantly change and are always testin g other alternatives. . I don't se e a pattern of that. okay. Andrew: So the process that you told me about earlier. Occasi onally we'll stumble on something that is performing so much better than what ha d been there before. I think they kind of go hand in hand. in some ways. ironically. Do you think that extra click gives you a little bit more credibility with Google because the users not returning right back to Google. So if you click on a free search listing and you don't go back to Google. I mean. I will say for all of the issues that I have with Google. to a next result. we'll be tempted to go and change a whole bunch of ads over that same kind of copy. a discrimination against new entrants in a market is difficult. right. What do you do differently from the rest of the world? Lou: Well. for example I think Google en . I think t hat works against those websites in terms of having served up results that you w ere looking for.40 for that same click. or both? Lou: Right. that encourages an ext ra click. I never really thought 's possible that that's helping reduce our bounce rate o the extent that Google may think of that as a bounce hat we land on search results pages most often and not ay result in a lower bounce rate for that ad. an unfair advantage a gainst other people that want to try to unseat you. Andrew: Okay. So having bought for an extended period of time gives you a n advantage. I may bid $1. I think when you have a list of results and people ar e constantly going from one result to a next result. he's more like ly to maybe type in his search term again and do another search? Lou: That's a good question. So I think t rate problem. yo u seem satisfied that you found what you were looking for. I think small slow changes with your Google campaign is the best approach rather than wholesale changes. but has a list of offers. They don't like people to bounce around. So time really works to your favor if you can creep up there and become number o ne. I don't distrust their algorithm when it come to . But then. that website gets some brownie points. . about it that way. values an d maybe places a disproportionate value on people finding what they're looking f or. We try not to get too complacent if an ad's been running f or a long time we'll often create a second ad to run side by side with it and se e if we can't beat the performance of the existing ad with something new. but paying enough that you become first. They like a stabl e environment for a given search term. yes. defend number one. So I don't t hink they're gouging by marking up the click to my maximum bid price.00 for a search term and I'm often charged $0. Andrew: So then the next step is the text on the ad. Andrew: I see. It just me ans trusting Google's system. Are there any tips that you give us.

Can I still get that price?" So we never start a new offer right when an old one expires because we don't want to create the reputation of someone that always has a deal going on." So thanks. we ac . because I'm l egitimately looking for a product. Andrew: And do you make your sales topical or seasonal all the time to relate to what people are thinking about? Lou: Yeah. "Look what people are mis sing and they don't even know the basics. came in and helped me stabilize the site and he and I have been chatting a lot and he keeps sending me links to Google ads that link t o web pages that are just the homepage." the number of people that would click on that ad and then reach for their credit card within 24 hours is s mall. "24 hour sale on pool tables. for helping guide this inte rview if you're listening to this one. I do think that you're trying to. and we tend to see a big spike in sales around the e xpiration of the offer. and then we see another spike the next day after it's ex pired with people calling up and saying. you keep tr ying to boil the ocean with your interviews and understand every single thing. the sale's still on. with people that don't think much about the land ing pages that they're sending people to. I'm not just fishing on ads. I f you could explain to people that this dopey thing is a mistake that they could easily correct. but it sounds like you un I trying to do. What we found in the case of a pool table. even starting a t the ad. So having an offer that is too tight on time is actually a negative. Lou: What we do. 'Like what were they thinking to land me on this page?' I mean. and t rust is an important part of that relationship in terms of." and he's saying. A lot of times I'll click on a Google ad. we try to do that." They shouldn't see. We try to shift the Google ad copy as well. you've done a lot. So if you refer to what y ou're running right now as a weekend sale then when they land on the website the y should see a banner that says. "Memorial D ay Sale.courages people to put the keyword that the users search for within your ad so t hat the user feels that the ad is relevant to the search. And the homepage is so hard to figure ou t and it's not at all connected to the ad and he goes. And I do think there are a lot of companies tha t miss the boat on that. Bob Hiller. for sure. like for example in the pool tables business on pooltables.c om. talk to me I'm trying to phrase the right question. my website was up and down for a couple of weeks and t his listener. . derstand what thing. it's so compl etely irrelevant for what I was looking for." D a lot? How do you do sales or how do you do . you're building a relationship with someone even before they click on your ad from Google. "Andrew. So if it's a Mother's Day sale or a Father's Day sale or something like that. it's an average tick et price of about $2. If you said. Andrew: It's interesting. Another thing that I've heard you say is. But if you have an ad going for "Big Memorial Day Sale" and then you basic ally present that consistently for a couple of weeks. in some sense. they know when it expires. They see the sale. So that's one o you do that about that. And I'll just sa y. you find that that repeat visitor pattern works to your advantage. "Weekend Sale. I really wanted to buy yesterday. does that work for you ? Are there other tips that work for you? Lou: We do tend to do that." So I think this whole idea of consistent terminology.000 so you're probably not going to buy the first time you land up on the site. "Oh. getti ng what you're expecting to see. present what I'll call a consistent message. We can literally sell any product for any price at any time. well. Bob. those are all house branded products so we have no MAP restrictions. So that gives us unrestric ted flexibility. "Weekend Sale. . So I think there a billions of doll ars wasted on Google. So we typically wait a couple of days and then launch a new offer after that.

Andrew: What do you mean? Where do you walk the line? What's an example of the t ime you've walked the line? Lou: There's a grey area right now about using companies' names and stuff and how bidding on a competitor's names and that sort of thing. there usually dow n by the time somebody might get upset about them. it is internal. If Google will let us put it in the copy we'll stick it in the copy." And it had a noticeable and improved effect on the nu mber of people willing to type their credit card into that field. "Hey. You just have to keep running the test. "Oh. And since these are really more like transient ads. Master Card. Andrew: Oh. 10% to 20% I t hink you said. in some sense. Andrew: Okay. and then we went to a little lock and said. So there's a lot to it. What software do you use for t hat? Is this internal or you using something like Visual Website Optimizer? Lou: No. My programming guy said. American Express . Andrew: Lou. So we've talked about we the person sees when he types a search in . We got to the credit card field and we always just had Visa. what would happen if we make this bolder or we make this bigger?" And so I think you'll end up having to something of a sta tistician to run an eCommerce site because you have to be able to weed out the r elevant and the irrelevant results from these test and how big is the sample siz e and can we really be confident in it. And we did d ifferent test. and I know to my audience. So if it's the Tour de France for the bike business." only ten times more exciting to the average "American Idol" fan. And then we added a Authorized. that's w hy I feel that's. Andrew: I see. We even started with this idea. So we tend to be a little bit liberal ab out our use of terms. And so I feel like you're never done testing. I see. There's a lot mo re than people think behind websites. Okay. Do you have an example of that? Lou: I mean. I love this. our secret sauce. One of the re asons why I took this line of questioning with you is because I heard just a lit tle bit of this on the Frank Peter show that you did. I don't think we could run th ese companies as successfully without a really great software group. To me. we did "checkout" as the button and then we went to "secure check out" and that improved conversion.tually find the click through rates when you have those topical Google ads copy is great. Lou: Yes. This is so fricking interesting. So we developed our own platform and again. At any given time we're running dozens of concurrent tests and their all b ased on people's hunches like. y ou know with the lock. I read a a rticle about trust and the checkout page and saying how a lot of people are unce rtain when they're reaching for their credit card and typing it in. this is like watchi ng "American Idol. I said. 'secure checkout' and that one is even better. That's not going to ha ve any effect whatsoever. If you put it in your ad copy when they're searching for Tour de France you're probably not very safe. we'll talk about the "Tour de France Sale" or something. but if you put it in your ad copy when someone's searching for bicycle tires y ou're probably pretty safe. Like technically you might not supposed to be putting it in ad copy .net trus t logo. logos and those converted pretty well. So Tour de France might be an issue with the tour. "You're out of you mind. It's fairly dramatic. I love this. I love this"' You were even talking about the button colors influencing sales. I know that to most of the world this must be the most boring conversation ever. So I see the A/B testing and the influence of it.

or by price. When is said.to Google. there is a list of other options on the page. I'm on this site and I'm interacting. Andrew: Gotcha." for example. Andrew: When you say. If you ask a que stion and get an answer that is kind of consistent. sorting the products fro m Z to A or A to Z. are all confidence building t actics. So it's kind of ou r version of "About Us. and that sort of thing. or by discount level. does that give you the results you were expecting?" So if you get those results then you start building up trust. I f eel like if you can just engage them to start working with your website you can very often turn them into a customer. There tend to be. and tho usands of happy customers. Why should I want to do business with them?" And explaining things like free shipping and no sales tax and the 100% satisfaction guarantee." Lou: Right. "Why buy from us?" Andrew: I see. like. whatever the current deal is. we have a sense of what they see on the page. "I've never hear of them before. with what you . "Yes. So just the differen ce and being able to see the way the product is represented removes uncertainty. or by price." And we also like to hav e several places where we identify. "15% off components. Andrew: Okay. Lou: And that's the question we try to answer. is the answer to that in one block like a question very clearly laid out the way the p erson might think of it and then and answer or are you talking about throughout the page you look to answer those questions that they ask? Lou: We typically pull it out as a section of bullets and we let people click on it and get a more expanded answer to all those questions. Andrew: Why buy from us? There is a sale or whatever the actual thing that they came in for. Virtually every product shot that we've got on every website was shot by our own group. or whatever." I mean. So you're giving the user some controls that are hopefully obvious enough. "No. 'Is this really the product I wanted? Is that color r ight?' So we pay a lot of attention to those things. we have "About Us. So we like to have an offer. It's almost like when you walk into a store and ask a question. Does that mean that there's a search bar on there too? Lou: Yeah. and more importantly that interaction served up the results I was expecting. People want to make sure. Lou: So you spend a lot of time saying. they end up on the page that ties back into what they said. Well. Because most websites are so bad and the b ar is so low that when people come to a site that has fast load times and good i magery." The reason that you want that is b ecause you want them to hit a slider or a drop down menu and do something to mak e them say. "Okay. So very often you can display that by brand. and that sort of thing . "Why do business with these guys?" I f eel like a lot of people. we do a lot of our own digital photography. we let them customize the results. "Why do business with BikeTireDirect. and you get calling t hat page a search result page I think. anything else on the pa ge that you can tell us? It's a list of items not just one? Lou: We do try to get at least one. what they click on." but think our bigger questi on is. Why buy from blah blah blah on every lan ding page. more or less. You know. that's the question they have is. like filters essentially. tires and tubes special this week. "Is there a search bar?" You redirected me and you s aid.

I don't know anything about it. "And if you happen to online and sear ch for a discount code you might end up with a price that's further reduced. I like to think that on PPC we're pretty far up that curve. that we c an price a product under the MAP price. so we feel often. Andrew: I love the testing you guys do. all the time testing everything. the order process. but may not be c onspicuously placed on the website. since we're talking to existing customers. Anything that you learned about email. So there is a degree of like a private commu nication going on. And I put email in a category like traditional media." Andrew: All right. "Hey . it's never like the same thing over and over again. how do you ensure that come back or how do you encourage them to come back? Lou: Yeah. So depending on the business. we'll sometimes give them a discount code tha t's site wide. So we tr y to make it somewhat interesting in terms of what the next email is going to ho ld for them. the vast majority of coupons sites get most of their income from affiliate relationships with peop le where their being sent those offers by the sites and they post them on their . Well we've been through the whole gamut on affiliate market so I p ut this in the broad category of affiliate marketing. Lou: Yeah. So that way we' re trying to appeal to people's interest and not just bore them by pounding on t hem with the same email or the same products all the time. Discoun t codes. I mean. So I don't think you w ant to dismiss more traditional forms of advertising." And we had a phenomenal return from that mailing. Sometimes we'll give them an offer on categories and sometimes we 'll have specific products that are marked down that time of the month. you mention that a lot. We don't usually consider the emails to be part of public adv ertising. we're going to put it on spec ial. I think on email we've gotten really good at it. Like we went a long time and never p ut anything in snail to any customer at any time then finally when we said. Do you want them back or do you want us to blow it out?" Andrew: I see. but we usually check with the manufactur er first and say. b eyond this? Is there like putting a logo on the email that increased sales or so mething like that? Lou: Yeah.expected and is an informed answer then you say to yourself. m uch better than any other program we had had in the past. What hap pens afterwards? How do you make sure that if you've paid so much money and so m uch time to bring the person to the site and finally get them to buy. You said. We like to keep people from unsubscribing to the list because we feel as though it's "out of sight out of mind" and if we spam them with offers too often or the offers ar en't good enough then they'll typical just stick them in a junk file or unsubscr ibe. so we'll put a category of products on special or a seasonal or a topical special. now. I think we're like only half way up the curve on email. Andrew: Is it about exclusive deals also or just highlighting the deals that are available? Lou: It's deals that you could click through from the email." Do you intentionally seed the discount sites with codes? Tell me about how that wo rks. We tend to rotate the offers around. we have too many of these. "These guys most re ally know their product and I want to stay in this store. I think I've got a sense of. So we've done pretty good at email marketing so most of the sites send out an email every week. "Hey. about doing email right. but I think we're continuing to learn and improve. but I don't think you want to necessarily rely on them compared to the more modern forms. let's do a postcard drop to people that haven't done business with us for two years and see what happens.

but it's more like the "Julia Childs Art of French Cooking" cookbook than necessarily like a Better Ho . Lou. The restaurant is happy because it served all th ree levels of price sensitivity. people hav e price sensitivities. I've had inbound calls from people that have seen interviews and said. affiliate marketing is paying people most of the time for your own traffic. I understand what I get from all this. Lou: But I think as a brand. I know my audience gets to get a lot from this. People are already looking for your product or your brand. "What's your revenue?" And yo u revealed it. I mean. And then I asked you about buttons. "Look. Tha t's a pretty good business to be in. Andrew: I've got to do an interview with one of them. in terms of the customer. they use them. I mean. It's not easy. have made a huge amount of money through the years and continue to make a lot of money. I think that it's almost like this whole concept of dynamic pricing. So I view it as our h appy hour menu. They land u p on a coupon site because that guy has good SEO results for your name because h is site is so well trafficked and then you're paying them 30% of the amount that you gave as an offer to the customer. and text. What's in it for you for sharing so much with us? Lou: Well first of all I welcome anybody who wants to enter any of these busi nesses. So you have one person who goes to RetailMeNot and a few other co upon sites and just types in the coupon codes that you guys have that are specif ically tracked to those sites and you know that people are going to come to thos e sites just before they buy." or. Lou: But I will say frankly. We've actually come around full circle on it to the point where we said. yeah. So we post discount codes on RetailMeNot . but we know it's popular. They get both the code that gives their users a discount and they get a commission on the discount that they've promoted. let's do business together. Andrew: I see." And so we concluded that we would rather just seed the sites ourselves with disc ount codes so recently did pull out of LinkShare. another person could be ordering off the menu. All three peopl e are getting what they wanted. another person is sitting at the bar at happy hour paying the happy hour menu. So we kno w a lot of people are looking for discount codes before they make a purchase. Lou: Yeah. those large coupon sites. I think we haven't done enough testing to know for sure wheth er that's better or worse than not doing it. quite frankly. Lou: We do. and made a decision to just do that ourselves and we've had amazing result s. we were in there for several y ears. mostly RetailMeNot.site in turn." or. Andrew: And the way that this business works is it's usually an affiliate progra m that these discount sites go to. people find th em. that's right. and you re vealed it all. I know that we haven't given people the tool kit to go and compete against Lou Doctor. And I don't think there's anything wrong with that. as an eCommerce vendor we've sort of seen the er rors of you ways and we don't really think paying those commissions makes sense anymore. "Hey. and SEO. Andrew: One of the first questions I asked you is. "I want to talk to you about this. "Would you be interested in this domain name?" So frankly I think there is something of a cookbook to this. So one person will be eating in a restaurant using a Grou pon to pay for it. Andrew: Yeah. So I think the companies that have set themselves up to do that.

Andrew: Before I thank you let me thank Sandy from Horizon Partners. "Half the guests here. I mean." I'm just saying 90% of the guests I wouldn't have know about. I wouldn't have called directly. I think I mentioned we've done about $11 million last year through all three of those comp anies. if not for someone like Sand y who was a past guest making the introduction. I wouldn't have been able to land. Lou: That's right. Andrew: And thank you all for watching. t hat are little tweaks that didn't pan out. thank you. To me. I'm hearing that. Bye.mes and Gardens. There's like little details that you can pay att ention to. people are starting to under stand the kind of guest that I'm looking for. thanks for doing this interview. What's hap pening is I'm doing these interviews over and over. And Lou Doctor. And without them listening in and saying. It's great to meet you . they're all on a very steep growth trajectory ." there's no way I wou ld know about Lou Doctor or I'd say. you really have to work it every day. Lou: You're very welcome. I'm going to introduce you to Lou Doctor. . Thank you. I've spent millions of my own dollars growing th ese companies and I'm very happy with the trajectory that they're on. I'm not hearing about the 30 other ideas that you tested. I'm Andrew. I'm hearing the exciting part about how you send out postcards and business grows. Andrew: Yeah. but at the same time I'm not launching a fourth or a fifth one right now becau se they require a lot of tender loving care. You can't just start it and walk aw ay from it. We're looking at $20 to $22 million this year and I'm pretty confident ab out $30 million next year. Just wouldn't have happened. It's not easy. I was going to say. So Sandy. "Andrew.