Stop Selling to the Masses, Sell to Rich People Instead

Sean Weisbrot: Ed Kang is the chief strategy officer of startups.com, which has helped thousands of startups to learn how to grow their businesses successfully. In this episode, we focus on the e-commerce. We talk about starting e-commerce brands, growing e-commerce brands, advising them, financing them. Things we've learned from our failures and our successes, and this is a really great founder's journey episode. So if you are interested in e-commerce, you're running a business, or you wanna start one in the e-commerce space, you're gonna love this episode. What is the craziest thing you've seen?

Ed Kang: In e-commerce, some of the craziest things I've seen have to do with those products that I thought would never sell. Like there's no way that anybody's gonna come and buy this stuff. I kind of get shocked by it, but then they end up selling like $4 million of it. But then in the end it's like a no brainer. And this is what I really like when founders can give me an insight and say, no, this is a really big thing. I'm like, really? And to, to talk about one That completely shocked me. It was, I. It was menstruation, underwear, and so I, they just said this. I was like, that's a thing. And they said, yeah, it's a thing. And then they showed me the numbers on it and I was shocked. I also worked with another founder. She had an after sex cleanup thing, like. She demoed it using Twinkies, and so she literally shoved it into a twine and that was the way that she got tons of traction, huge success. She ended up exiting to private equity. But yeah, I've seen some pretty crazy stuff. And this founder, she ended up sending me pictures from trade shows. She's at, like you can imagine the types of trade shows she's trying to promote herself. So the whole package, it's. Pretty crazy. A lot of fun because I think to stand out in e-commerce, you have to do some things that are crazy.

Sean Weisbrot: The craziest e-commerce brand I've seen is probably Scrub Daddy. Scrub Daddy. Oh, that's the one that was on Shark Tank. They've done hundreds of millions of dollars in sales over a damn sponge in the shape of a smiley face.

Ed Kang: Oh yeah. Like talk about the other one. Slime. Like just personal slime or selling glitter slime. Glitter slime on the internet. Like it's so niche. Yeah. That's. Some crazy stuff, man.

Sean Weisbrot: What made you wanna get into financing? E-commerce brands and, and she started, you, you told me as well, to build your own e-commerce brands.

Ed Kang: Part of it is the challenge of it, and then there was a time when it was novel, so selling something online and going direct to consumer was the big rage. So you wanna jump on that and you wanna explore it because. In hindsight, you look at it and go, okay, yeah, that's a no brainer. But back then it was pretty interesting. It was different. There was a lot of differentiation. A lot of people said there's no way you could sell direct and different variations. So that's the personal interest. And then just to challenge, see if you can do it, and learning the industry. So if I'm gonna invest in e-commerce brands, then I wanna make sure that I'm versed, I understand what it looks like. And then understanding everything have to do with financing. So if I'm gonna be connecting an e-commerce brand with money, because one thing that you learn really quickly is that e-commerce very capital intensive. So we have to figure that. And then with the new things with, you know, fulfilled by Amazon, all that distribution. You just have to learn all these things, and by doing that and being curious about it, that's what made me go deeper into the rabbit hole and explore everything to do with e-commerce.

Sean Weisbrot: So you said that the first brand you tried to build was nothing to write home about. What was that brand about and why do you think it didn't go where you wanted it to go?

Ed Kang: One of the e-commerce brands that we tried to do was an online comic book. So we had this model where we said, okay, we're gonna be the Netflix of comics. Because everybody wants their stuff for free. We need to have some type of physical good. So we combine it with doing Kickstarters, and then we sold the physical comic books like an online store, and we said, all right, people are going to want to order directly from us because they've been involved. And then they go out there. And so it wasn't an e-commerce brand specifically just for e-commerce. E-commerce was a. Part of the entire package because I was never interested in creating, oh, a widget. So I'm gonna create whatever, a coffee mug with an anti spill, whatever, and try and sell it directly online. E-commerce for me, was always a part of a bigger strategy, and that's because I'd learned and had enough hard lessons investing in other e-commerce. Brands or startups or founders. So you learn and you say, okay, we've gotta do something different.

Sean Weisbrot: So what happened with that brand? What did you learn from it?

Ed Kang: We learned that the habits of users combined with the culture of that particular industry, did not jive with having. Thousands of comic books sitting in your living room in some type of warehouse did not jive with going in and packaging, having to pull something, get an order, walk over, put in an envelope. All those things and, and these are the painful lessons that I learned was just the fulfillment, the fulfillment, tracking, all those things. The administration for e-commerce is just absolutely crazy, and that's where a lot of my e-commerce ventures have gone to die, but. Everything coming together. It was one of those ideas that if it worked, and we started a new trend, and don't get me wrong, we got tons of traffic. We did all this crazy Reddit hacking and we got all the artist community involved and it was a lot of fun community. But just that last bit of getting someone to pay $5 and then shipping something to them, the unit economics just did not work out. So it tells me. That your avatar was probably broke, the avatar was not ready. Let's break this down for a moment. The reason we had this thesis was we saw this craze out in the east and I had this co-founder and he was super into web, web comics and eastern media and how people consumed. We did a debrief on this actually about a month ago. We talked about it again 'cause we like to get together and commiserate about how bad we failed. And he said in the east, everyone's on a train, so they're on their phone. So they're scrolling in the west. Everyone's driving. So they're listening. And that's the reason, podcasts and audio books. So we didn't understand the behavior. So that was the first thing. The second thing we added. The entire concept of, okay, if people aren't gonna pay for reading online comic books, which became a model later on, reading stuff online like web serials, like people are paying for it now. We did this years ago, like, I can't even remember. It's gotta be. It's gotta be somewhere like five years ago. And so we're just ahead of the market. So then we said, all right, what are people buying right now? What are people actually spending cash on? And then it was the collector's market. And so we understood people are willing to pay a little extra for collector stuff, but then everybody was. Doing comic books on Kickstarter and it was just saturated. So we went from alright, the market's not ready, we're ahead of the time, and added a component where it was already saturated and we had no 10 x order magnitude differentiator. And that's a recipe for disaster. You don't know where you are in the middle. So we just ended up, you know, burning cash. Burning cash, and I was plugging in money. My money into it, just constantly plugging money in. And it just got to the point where I was like, no, this is not working. You either has to work on its own or I'm out. And the original founder, he valiantly, tackled it, did okay for the next year, but ended up shutting it down himself.

Sean Weisbrot: You have, you tried

Ed Kang: other brands with

Ed Kang: the physical component? Uh, game company, shipping games? I've done. Clothing company, iron Ons with my son. I invested in his company and then that grew enough where we were shipping things. We had an e-commerce store. I've tried a little bit of everything. You kind of have to give me a little more to go on, figure out what to talk about.

Sean Weisbrot: The goal for me is like things you've learned, right? Things you've tried, what you've learned, whether it succeeded or didn't succeed. I've

Ed Kang: learned that right now. If you want to stand apart. The lesson that I learned in another startup is to go premium. I'll relate these two stories. We were launching an e, an education, an ed tech platform in China. It was funded and someone gave me some advice and they said had to do with executive coaching, and they said, don't coach losers. That's what he said. It's easy to get the wrong customer. So we applied that and I said, it's not gonna work if our first cohort for this EdTech platform are not successful people. So we worked really hard to get the best of the best. We made it just very difficult, so much friction to get in. We increased the supply demand tension. It was up to a hundred. People were clamoring to get in, so we made it exclusive, and then we were able to take that group of people and show it to everybody else, and then the floodgates open. So that's what we did. It was excruciating, but it was well worth it. So with E-commerce, I've seen the most successful ventures. And I've learned this by doing it the wrong way, instead of trying to sell to the base, which is probably your late majority, if you're looking at the innovation adoption curve, you know, crossing the chasm or your even early majority, the majority, the biggest part of the bell curve, it is just asinine. It is so difficult to stand out. But if you sell to rich early adopters. One, they'll give you feedback on your product. Two, they'll be evangelists. Rich people are the best evangelists in the world why they're rich. So if you can get in the hands of someone who's wealthy. They'll talk about it and it doesn't matter if you're darling on social media, stop going for the mediocre middle and just blow your brains out trying to get the attention of the masses. Get one wealthy person who goes to like a fancy luncheon and says, I bought this product, or shows off, Hey, look at this, and you are in. It's easier said than done, obviously, but to me that's the fastest way. If I had to start any e-commerce brand, that's what I'd be looking for is how do I get this? How do I get wealthy people to use it and talk about it and engineer the virality, and then I'll start to go to the rest of the base.

Sean Weisbrot: It's interesting you say that. I was just having a similar conversation with my fiance yesterday because she, when she moves to Europe, she wants to start a YouTube channel and she wants to, 'cause she's from Vietnam, then it'll be her first time living outside of Vietnam. So there's a lot that she'll be learning about the world doing it, and she wants to teach that to Vietnamese people. I go, look, you know, Vietnamese people are poor. Let's be honest. I go like, sure, there's, there's rich Vietnamese people, but like, if you do your content in Vietnamese, you'll be attracting the poor Vietnamese. You wanna do it in English, so you attract the rich Vietnamese, right? You need to know what you're making the content for, why you're making it, who you're making it for, and what you could sell them. Later on, she's like, YouTube's not a business. She, she's like, you know, my content is like for, for blogging, for, for life, for this, for that. I go, yeah, but you wanna make money from it. She's like, sure, of course I can. I go, great. Well, like you should be thinking about YouTube as a business, otherwise don't bother doing it. I go, if you want me to, to advise you on how to do it right, I'm happy to do that. But if you wanna, you know, waste years of your time like I have with YouTube not doing those things, then I, I can tell you exactly how to not do YouTube. 'cause I've not made a single dollar off of YouTube after four and a half years. And, and so I, but I also know that when you do business podcasting, it's very hard because the algorithm. If, if one episode is about e-commerce, and the next one is about human resources, and the next one is about investing. The algorithm doesn't know who the, how you're talking to, it doesn't understand the avatar of a startup founder or a brand owner. But if you're selling financial stuff, every, everything is about finance and do this, finance, do that finance, then they know, talk to finance people, right? Push this algorithm stuff to, to finance people. So for her, she's like, I want this to be the masses. I go, you should not make content for the masses because you're talking to no one.

Ed Kang: Yeah, you sell to everyone. You sell to no one. That's definitely the case, and I think that's a good lesson because even on YouTube, social media, you know, being a YouTuber myself and being able to monetize and convert and make that a revenue stream, you have to really think through how you're solving a problem. Like why would someone care? It's the same thing with an e-commerce. Like someone develops a widget. You ask yourself, you know, I'm speaking to YouTube like. I'm recording a video on this right now. Ask yourself, does the world really need another one of these? Right? Does it really need another one of these? And if you can say, well, not really. Can your stuff be an order of magnitude better than what's out there? Right? So then you ask yourself that, and then you have to ask yourself as a founder, do I have the. Personality 'cause e-commerce founders are wired different. I know. I know an e-commerce founder and you know, he is doing really well for himself. I think last I heard he's hitting 4 million a year. He started off, you know, just doing it as a side hustle, but he has this crazy obsession. With refining the product and making sure everything goes right for the customer and the experience and this real cool thing where retrofit all these Bitcoin mining machines to do custom engraving and etching to, you know, differentiate himself. He's nuts. Like his mind works completely different. Same thing with the YouTuber. Like Mr. Beast's mind works way different and I think that there's this niche of e-commerce. Founders. Case in point, I know this kid, I hope I'm not disclosing too much, but you know, we'll see. He comes to me and he says, I need advisor. I'd like to talk to you. And I go, great. Tell me about your business. And then he says, well, I started an e-commerce brand and I did fulfilled by Amazon and there were all these logistics and administration. And I realized that other people. Can't do it very well. So I got a bunch of money together and I started buying those e-commerce brands. So I started buying underperforming brands on Amazon and I just put 'em all together. Now he is in San Francisco, the kid is in his early twenties, I can't remember. He's doing over a hundred million dollars in revenue a year. He's bored out of his tree. Everything is on a system. His family came in, I think his brother comes in, runs it, and he had an identity crisis. He's like, what do I do with my life? I was like, you don't need an advisor. Like, why are you talking to me? And he just said, I've just, I'm lost. And he, he, he sunk his whole life into that. But when I picked his brain, I said, so how do you break things apart to decide which e-commerce brand to buy? Like he was advising me. Totally different method of thinking, and I think that's something a lot of founders don't consider when going to e-commerce. I'm happy to take his advice,

Sean Weisbrot: maybe he likes my idea and wants

Ed Kang: to invest in it. There's a lot of money to be made in buying underperforming assets like a private equity plate. Like you roll it all up and that's what I'm seeing right now. And there's a lot of money in e-commerce. You wanna know where the money is. It's in helping e-commerce entrepreneurs, like look at Shopify, right? Shopify. But I know this founder, he ended up just ditching, he ended up being frustrated with last mile delivery and you know, all this stuff. And now all he does is he builds warehouses for small e-commerce brands that aren't gonna sell through Amazon and all those things. And he just does last mile fulfillment, picking, packing, ordering, all that stuff. The guy makes, boatloads owns his own building, so it's an asset. Now he's just got robots doing it all for him, and it's on automation, low staff. The guy makes cash hand over fist and because everybody wants to get an e-commerce. So if you can be in the support layer, the administration, the financing layer of e-commerce, well there's a pretty penny to be made there.

Sean Weisbrot: That's why I like the lending side, but I don't own the lending because I don't have the money to, I mean, I could do lending myself, but that's also a really fast way to probably lose all your money.

Ed Kang: Yeah, you'd be surprised. Yeah. You'd be surprised as how people get started. It's just like anything with investing, it's all about deal flow, right? Like you can easily go, let's say you take 10 grand, you put it in the hands of the right e-commerce. Entrepreneur, they'll give you 12 grand back, $13,000 back. Like that's a healthy, solid return right now. You look at it and the healthier they are, the less they're gonna need your money. So now you're competing against other forms of financing banks. So that's where things get really tough is quality deal flow. Just like investing, you get in on a quality deal and they've got fomo, you don't get a good deal. Like you don't get enough ownership to meet the requirements for your fund. And same thing with e-commerce. So then now you have to take risks and that's where you're gonna lose your money. People who need the money. I've got a founder, I we're talking. The other day, literally their product is on my shelf. I think they do like a million dollars a month. Right? It's this deep tech pharmaceutical brain, sort of performance enhancing all those things. Great brand. It's a new tropic. It's a, it's a supplement. You immediately categorize the product. Okay. I don't, I personally do not care. What I care is about all the stuff around, around it. Okay, because I give everything better than a 0% chance of going to the moon. And if something is, let's say in supplements or in some type of vitamin category, nice to have, I'm like, that's fine. Where the value is is what the founder does around it. It's the brand. And so the reason I got interested in this company was the guy sent me his package. In it is this massive leadership personal development book. It is like so thick, right? And the branding is spot on. It's got this sciencey, mysterious like X factor thing going on. And I loved it. I loved it. And I was very interested in working with him, helping him, raising for him, investing direct myself, but then I got into his. Finances and he was transparent with what's going on in his life. I said, I can't touch this with a 10 foot pole, right? There are so many other factors that go into it, and that's the risk, and so therefore, I. It wasn't a risky product to me because there were a lot of moats and I loved the brand, and I thought it was viral enough people could talk about it. We'd get in the hands of influencers, like there was something to work with, but the risk was with the. Founder, the company, the unit economics themselves. And so it never would've passed due diligence. And that's typically what you hit. You know, like founders come in all different shapes and sizes. So finding that deal flow with a healthy founder, great leadership, great management, great product, build a brand, got some moats going on. Of course you want to finance that e-commerce entrepreneur, but are they gonna take your money? Probably not. Hey,

Sean Weisbrot: just gimme 10 seconds of your time. I really appreciate you listening to the episode so far, and I hope you're loving it. And if you are, I would love to ask you to subscribe to the channel because what we do is a lot of work. And every week we bring you a new guest and a new story, and what we do requires so much love. So that we can bring you something amazing and every week we're trying really hard to get better guests that have better stories and improve our ability to tell their stories. So your subscription lets the algorithm know that what we're doing is fantastic and no commitment. It's free to do. And if you don't like what we're doing later on, you can always unsubscribe. And either way, we would love a, like if you don't feel like subscribing at this time. Thank you very much and we'll take you back to the show. I created an an FBA test many years ago. I spent about $5,000. I did not do my research or market validation, but I looked at what else I saw on Amazon in the moment. So I, I was living in China at the time and my friend runs, still runs, he still lives there and still runs a three pl uh, third party logistics for people who, dunno what that means. He helped me source the product and he has a specialty in FBA, so he helped, he directed me towards FBA and he helped me to get the product into FBA and and onboarded and all that. Lost $5,000 doing it. This was 2016, the summer of 2016 for the election, I saw people selling bumper stickers related to the election, and they were killing it on Amazon. I mean, thousands a day. $2, $3 for a fucking bumper sticker. So I said, I am gonna sell a bumper sticker, and it's gonna say, give me a dollar, or I'm gonna vote for Trump, or give me a dollar. And, and I, I won't vote for Trump. Some of them like that. I was on Facebook groups. I sent it to these reviewing communities trying to get, you know, reviews for Amazon. They stole my product. I got a z, meaning I I gave it to them in exchange for reviews. I got zero reviews. So basically I, I lost a hundred units for no reason. I sold no units, and then Amazon charged me $1,500 to dispose of the units that were on the shelf. And my problem was, I didn't properly vet the idea, I didn't do the research on the idea. I didn't, uh, I, I created a product that people wouldn't buy over and over. I didn't market it. I didn't put ads a, I didn't spend money on ads to market it. I tried the organic way, which failed miserably, and I didn't have something that could be a brand. It was a novelty item. That was brandless. And so I wasn't building an authority. I wasn't building a brand. I wasn't building something people would come back for. Um, and it was on a short time horizon because when the election is over, people aren't gonna care anymore. I wasn't aware of those facts nine years ago, and so I lost 5,000, $6,000 needlessly, but I learned a lot about e-commerce. In that time, and I haven't attempted it again, I ended up investing in his e-commerce brand. He had a brand that did nighttime driving glasses, which was a good brand, and he was doing hundreds of thousands of dollars a year in Rev on Amazon. Nothing to scoff at, and it had the potential to grow for sure. But then like COVID hit a year after I invested. And people weren't in their cars driving at night anymore, so the brand nearly died over several years. He rebuilt it and he sold it for less than I invested in. So I got some money back, but I got a fraction of it back. I got like 25% back. No, never got any dividends. There was no dividends for anyone because there was just, it was chugging along, trying to rebuild. Luckily he sold the brand. Um, so yeah, those are my two. And, and then I, uh, two years ago I found a guy who was running a physical liquidation store in Canada through a massive discord server. It's like 30,000 people on this Discord server. And yeah, and he was like, all right, loan me, you know, loan me $1,500, whatever. Let's get started and I'll return you. $3,000 in like two weeks. Because the way it works is if people aren't aware of liquidation, essentially you buy products from, uh, companies like Restock or you, if you're able to directly from Walmart or Target where these items have been purchased and returned, typically they're in perfect unused condition or they're in like almost brand new condition. But either way, they can't put it back on the shelves. So they will sell it to you at a massive discount. Sometimes it's in the original packaging, never been opened. Sometimes it's opened, but the packaging is fine. And so you can turn around and sell it under market to other people. After buying it at a fraction of the price, you could maybe spend 10% of the value and sell it for 60% of the value. So the people buying it are happy and you get a huge markup on it. Well, having a physical location is an awful idea. And he experienced all of the pain and suffering you could possibly have in Canada, in this tiny town of 30,000 people, he was able to do, you know, 10,000, 20,000, 30,000 a month. Until he had problems, like the second floor of the building he was in was residential and the guy was smoking weed and the weed was Dr. Drifting into the store and causing people to think that he was smoking weed in the back and they didn't want him to smoke weed. They didn't like him, they didn't trust him. They were talking about it in the comments of his Facebook group. I mean, you name it. All sorts of nonsense people stealing from him. Uh, CU customers stealing, employees stealing. All sorts of nonsense. And he just kept losing money after money, after money. And, and, you know, I, I had, I continued to reinvest in him because I could see it growing until eventually it fell apart. And, well, he's now trying to slowly pay me back. Um, from that it's a lot of money and it's very painful for him. But I think in the right hands. This kind of a business could easily do 50,000, a hundred thousand, maybe even a million a month in revenue if you have the right person in place and the right team to support it.

Ed Kang: Yeah, I know a founder, he's doing very well for himself like so well that he just can kind of pursue other passions, everything. He does the arbitrage and he goes around and just finds stuff that he knows is gonna sell somewhere else. So he is lined in, he'll literally walk around and sees something in Walmart, in clearance or something like that. And then. We'll just Google it or look on Amazon and then just moves it all around. It's all virtual and it's great, and I love those types of ideas. I think they're all out there. Someone who's willing to hustle. Founders don't understand. You have to have founder market fit first before starting e-commerce brand. It just can't be a good idea. You have to be able to sell it like manually, like. Uh, frontline, hand to hand combat sales, and I say, if you can't ring up 200 people and get them either interested in buying your product directly or know someone who would like that product, then you shouldn't get into it. You shouldn't begin. Now, the fact that you've got a 30,000. Person, discord server. That's a signal that I would definitely have bought into and said, okay, this is interesting. Where I would've turned down that deal is him telling me he can double my money, that I would've been scared. We were members of the community. If you can go hack a community, you know, that's great. But in e-commerce, I look for built in. Built in audiences. So you have to proven to me that you've got founder market fit. Let me give you another example. This company I just, I just helped launch, um, helped them, you know, raise some capital and got them going and I set up their e-commerce infrastructure, everything like that. I think they've done about 70. Last I calculated, I. They've done about $70,000 in sales. Okay. And this is in a few months. Their product cost $5,000 a pop. $5,000 man. Okay. Selling it all online. And I said, okay, I need to do it. 'cause it was kind of wacky idea, but. What got me interested in even helping out was the founder market fit. The two founders were so entrenched in their industry. The advisors that they got on board, they literally set up their home in the beginning and they just had people go through the home and there was a wait list for people wanting to do this, and they had like a cool intake thing and they brought me. On demos and they let me demo the product and try it out, and they walk me through the entire thing. And that's what I'll do with an e-commerce founder, really any founder if I'm interested in either getting them financing or working them advising or investing direct myself, and I'm not talking big checks here, just so that none of your. Audience gets the wrong idea. I'm not writing big, huge, you know, six figure checks. It's angel investing and I never expect to make any money. I only write checks that I prepare to say the money go byebye. I spent literally days with these founders listening to 'em, talking to them, letting them poke and prod me, and it was a health product and I experienced the demo and I said, okay, this is something that I'm willing to get behind. And they're doing quite well, but it's. That founder market fit, that I think is one of the big missing pieces.

Sean Weisbrot: He had a store that he was renting the space and he had some partners and they were doing up to like 50,000 a month with the partners. But then the partners decided to screw him over. They took, they stripped the entire business, left him with the shelving, basically took all the profit, left him with some tax debt to the government, and then they disappeared. Um. He needed help getting restarted. He was the one running, he was the person running the business on the, in the, the front end. And he think, he told me later he thought that these guys might have been stealing the product or finding it, like, you know, it fell off a truck. So that's why they were able to make so much money and they, they were pushing him to sell as much as he could, as fast as he could. And, um. And he said the money was really good. So he, he had the store, he had the community, he had the customers. He knew how to run the business, but he was left with debt and no cash. And so he needed an infusion of cash to get started again. And I was like, okay, you know, why not? What's 5,000? Let's see. And uh, you know, I watched it grow until it got to the point where the physical side was such a nuisance. It just wasn't, you know, he had to shut it down and it really screwed him up. Throw a rock and

Ed Kang: you'll hit dozens of opportunities like that. You know, real scrappy founders, and that's the problem with financing e-commerce. You've got a lot of entrepreneurs that can get into the space that can show initial signs of traction and sales, put out all the positive signals, but unless you. Do the due diligence and you see how can this go all the way? Then it's a really risky proposition. You pretty much have to go bulk and take like, I don't know, $10,000 and invest it across 10 and then you know, hope you find one that doubles your money and then double down on the rest of that until you make your $10,000 back. The unit economics are really tough in financing e-commerce, and that's the reason these interest rates, like even you look at PayPal, like PayPal's got oodles of money. They're sitting on bags and bags, a war chest of money that they could be empowering. All these e-commerce entrepreneurs, they got the deal flow, they got the market yet look at the interest rates that they charge, why they have to, because the failure rates are that high. The risk is. Astronomical.

Sean Weisbrot: I've experienced it. That's why I'm, I'm hoping that, you know, the, the newest e-commerce idea I have and the service that I am putting forth to e-commerce brands will be good because I'm learning more. 'cause I, I'm, I, I know that the, there's a problem of starting, but the bigger problem is not starting. The bigger problem is what you do when you see success. Right. Right. I think a lot of brands falter at a hundred thousand dollars per month, and that's what I'm looking at now with the services. How can I get to a hundred KA month? And then how can I protect myself from falling apart at that

Ed Kang: point, right? Because of the capital intensiveness of it all. And you can make a pretty bad move. You can take on bad debt. There's so many things that could happen and you can do the wrong deal. You can grow too fast as well. I've been a part of e-commerce brands. I wasn't the founder, but I was a VP where we had a deal with like Walmart and Costco, and they almost killed us. Like they just send back the product, you know, type thing. Well, at the same time, if you look at. Some of these founders, what I like to do is, I like to say, would I use the product one and would I keep buying the product? Let's say the company went belly up. Would I buy all their remaining product and use it? And I invested in an e-commerce brand and it was, it was this, kinda like this health drink and it had this really neat direct to consumer model using glass and craft stores and, you know, health food stores all over the place. I said, you know what, I, I would just convert everything in a product. Is really what it comes down to. Same thing, I am looking at the beverage product and he wants to go direct to consumer and doing pretty well for himself, but we want to add the e-commerce thing to it. And quite frankly, I take all my compensation and product, that's how much I love it, right? So I want to add passion to it because if I can evangelize it, then I have a better chance. I find it difficult these days just to write a check for, you know, founders or. A company, I don't know, it might be an attractive opportunity, but there's just so many things that go wrong. So I just have this desire or this obsession that I have to get involved somehow.

Sean Weisbrot: Mm-hmm. I, as you know, I'm on Reddit and some guy saw me talking about startups and he dmd me and he was like, Hey, I'm doing liquidation. Do you wanna, you know, do you wanna invest? I was like, no man, I already lost a bunch of money doing that. I'm good. No thanks. And he is like, ah, you know, I can, I can show you this and that. And I was like, I really just, I don't wanna be involved with it. I'm sorry, because I know what, like, I, I went through the ringer with this other guy. You know, we, we got deep into like, forecasting. 'cause it would take 14 days for him to get product. You know, if you, because he was in, um. Uh, Vancouver Island, right? Not even Vancouver City. He's on the island next to Vancouver. Uh, he would buy from Restock Canada, but it would take 14 days to Port Al Burne. He could sell the product so fast that he would run out of product before he would receive the next product, and they had to stop multiple times throughout the country. 'cause it's like literally the entire opposite end of the continent by ground. You know, they're putting them in in 18 wheel. You know, trucks and so we were thinking about like buying truckloads of, of, of stuff in order to make sure that it arrives in like 10 days instead of 14. He even considered and ended up moving to another town, the next town over, which is 10 times the population, which, like you, you're directly at the ferry to Vancouver City. And even that was still like 10 days instead of 14 days. So he had to go out and make relationships with like trading card companies. And he had a relationship with Walmart, um, that he was able to exploit and he had to just like figure out a way to get the product the same day or the next day or three days. And that was another big problem for us to be able to grow as well, was because we couldn't forecast when we would be able to restock. We'd have to shut down the store. Some days. We couldn't have people that we hired full-time, but we still had to pay them. So we looked at like, can we hire First Nation people? Right? Which for Americans is the indi, how they call it, uh, in Canada, the indigenous residents that live in the tribe, you can, uh, you hire them and the government will, will, um, like. Pay you the difference. So if you pay them a, a normal salary, they'll reimburse you some of that. So we're thinking about that. There's all sorts of things we, you know, I helped him to find a real estate agent to look for another location to get away from this weed smoking guy who was also an asshole causing all sorts fucking, you talk about it and you name it. We talked about it. Like I was super in with this guy. Like I was full-time helping him from a distance across the world. Literally. I was in Vietnam at the time, going between Vietnam and the us. And we were like 15 hours apart when I was in Asia. Insane. Waking up all hours of the night to have conversations with this guy just to try to make it work.

Ed Kang: Founders have to be different when they do e-commerce, like understand logistics and everything like that. Um, I'll do stuff where I'll help build a brand. I'll shout out on my social media channels, get involved. That's just not my lane. Now if you have a mind for that, that's great. Like I say, get involved and help the founder as much as possible. 'cause if you can do that, especially teach founders that you wanna get access to really great deal flow, it's a huge pain. But teach e-commerce. Entrepreneurs how to do e-commerce properly, right? Teach them all the little tricks, everything. And then now you've got access to deal flow where you can say, okay, I see the numbers of somebody doing really well, so I'm gonna put, you know, the cash in there. But that's the issue is so many things go wrong. Now with ai, it's getting better. You know, I was looking at a case study way back in the day. IB M's. Watson, they were doing this thing where they were predicting what type of frosting on cupcakes would sell based on the weather. And they found out hot days, vanilla, cold days, chocolate. And since IBM owns the Weather Network, they were able to do that. And so Watson predicted and they said, make. Extra chocolate. And so they, one, I think they did a 10% increase in sales, and, but they reduced their waste. Huge, right? And so now you need AI to plug in and say, all right, my shipment's coming here. It's this product in 14 days, I've sold this amount, I have this amount of demand. Should I shut down for a couple days? Believing that AI is gonna help with that. But it all goes back to the point. Most e-commerce entrepreneurs have an idea for a product. Great. Maybe some branding, maybe some marketing social media, but logistics and all that stuff that happens behind the scenes, it crushes them. Now, let's say they get a little success, like you said, get to a hundred thousand dollars and it's like, holy crap, I got more demand. But. My margins are getting eaten up. How do I negotiate a better price on this that should I switch over transition to new software? It's crazy, and you wanna invest in e-commerce founders or entrepreneurs. You have to be able to spot all of that a mile away, even before they know it.

Sean Weisbrot: I learned about logistics and supply chain management a little bit when I was in China. Because not only of trying the FBA thing, but also I was trying to do international trade. And so I learned about inco terms and, you know, uh, bills of lading and all of this nonsense. And I'm hoping through e-comm, I can avoid all of that by just having the factory actually, I, uh, the product I wanna make would be made in America. So I wouldn't have to deal with import, export, possibly export if people outside the US wanna buy it. But, um. I dunno about now, if Trump keeps going ahead with the tariffs, people may not wanna buy stuff from America, but at least Americans can hopefully, you know, sell, uh, or can hopefully buy enough to keep the business going. And, um, in that regard, you know, understanding logistics is a little bit easier if you're not moving. From, from without a country inside. Um, but still I've, I've learned many different lessons from the different industries I've been involved in, and so I feel like I have a much better head on my shoulders about understanding the numbers and the logistics than I think other people that have never done a business

Ed Kang: at all. As you build all that, you get that going. I'd be trying to build an audience as fast as possible. It's what I do now. I think it's the single greatest thing that. A founder or entrepreneur can do is become a channel preneur first. What I mean is develop channels. Own those channels, own the audience. Have the email addresses, be on the multiple platforms, make that bulletproof, and then figure out whether you're gonna plug products through it. I've got so many opportunities where, you know, I'm doing, I guess e-commerce. Vicariously, but contributing to them and lots of opportunities to create those network effects, right? And have people contribute content and build that audience, the more they use it. And that's the level you have to go through. I just don't believe these days and more power to anybody does it that you can just. Put out a product and and hope for some discovery algorithm advertising. I think that's just a really scary proposition. But then again, I'm old, I'm tired, and I don't need the excitement of taking all those risks anymore. So I pretty much try and de-risk everything, and to me, creating a channel first is probably the best way to do it. I hate

Sean Weisbrot: social media so much. I only do the podcast because I enjoy talking to other people. And, and even then the, I think, yeah, I don't really care for it, like the YouTube side or anything like that. So for me, building a channel, like I've, I've tried year after year and it just, the, like you say, build a channel, but it's, it's a, a life. Like you're building a life, you're breathing life into an entity that exists in the cloud that has your face on it. And I just don't wanna spend my energy doing that when I can do something else. Yeah. Your face doesn't

Ed Kang: have to be on the channel. I know lots of channel preneurs who basically build faceless channels, and I'm not talking about a YouTube channel. I'm talking about everything from I. Being a moderator on some type of group, having an amazing email newsletter, being the go-to person across social media channels, even just curating other people's stuff. That channel having direct access to customers. There's so many ways to do it, and that's the dilemma. That's the challenge the founders face these days is how do you do that in the sea of all these other people? But I know this one investor, he really inspired me. I, no, I'm saying that I totally forgot the name. Totally forgot the fund. But he goes around now and says, alright, I'm not interested in your startup or your product. I'm interested in you. And so he invests in creators and he writes him a check and says, now I want 10% of whatever you create. I remember listening to his thesis, he said, why would I go invest in a company and invest in a barbecue brush? I. Or invest in a creator who gets sponsored by a barbecue brush. I'm gonna go invest in a creator that creates a barbecue brush alongside with having a million people listen to their backyard recipes and say, from now on, whatever you put, I want 10% of your entire. System, your entire brand. Imagine. Imagine if you are able to invest in Mr. Beast in the early days and say, whatever you come up with, I'm gonna give you a million dollars. Whatever you come up with, you just give me 10% of that. You would be worth it. That would be, you'd be a billionaire by this point in time. Right? That's the creativity that's required because you have to look out there and just look at the writing on the wall. The more people can have access, the easier it is to get access to a certain opportunity. The more competitive it'll be and the faster it is. A race to the bottom, and sure, you might be able to make some money in the short term, but long term sustainability, I don't know. It just seems like a. A hedonic treadmill, if that's the proper application of the term, just seems like a rat race, hamster wheel, whatever metaphor you want to use that just, um, yeah, if you're young, go for it. All you young founders listening out there, man, if you are 18, 19 years old, you can live in your parents' basement, work outta your garage and yolo your life in there. Your cost of opportunity is nil. Do it. Go for it. Learn like crazy, but. Sean, you, you said you have a fiance. I'm married. I got two teenage kids. I got a mortgage I have to pay for college. You know, all those things, you know, it's different for us. So learn from us seasoned veterans. Take your enthusiasm and I encourage everybody to give it a shot. I.