How quickly can you find the following key metrics from your business?
Contribution margin.
Inventory turn ratio.
Return on inventory (the other ROI).
If you struggled a bit finding those answers (or if you just want to go to the next level), you need to listen to this episode with John Canetta. This episode was super fun for me and the content is what separates eComm companies who just get by vs. those who thrive (and end up with big exits). It’s a must-listen for serious store owners.
You HAVE to know your numbers. And your P&L may be lying to you and you don’t even know it.
- How his hedgehog concept allows him to consistently hit 80% margins vs. 40-50% like some of his competitors.
- His piggybank metaphor and how it shapes his decision making
- Marketing is fun, but operations are where your profits are
- Understanding your numbers and making it SIMPLE -
- How to look at and use Post Aggregate Gross, Contribution Margin, and Return on Inventory to hit his goals
- John’s 3 keys to business success
Mentioned in this episode:
“Atomic Habits” by James Clear
“Simple Numbers” by Greg Crabtree
“Good to Great” by Jim Collins
“Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne
Episode Transcript:
Brett:
Well, hello and welcome to another edition of the eCommerce Evolution Podcast. I'm your host, Brett Curry, CEO of OMG Commerce. And today we're going to get to hear directly from a merchant, a successful merchant. We're going to hear a little bit of their story and their philosophy. And I just love these episodes because I love when you get to kind of peel back the curtain a little bit and crawl inside the mind of a successful eCommerce operator. And that's what we're doing today. Hey, Brett Curry here, I've got an important question for you. Where will your next big idea come from? Where will your next big breakthrough come from? Or where will your next little tweak or little improvement come from? I have a suggestion, check out our guides and resources that omgcommerce.com.
Brett:
Today, joining me on the show is Mr. John Canetta, he's the co-founder of Discount Party Supplies, a fantastic eCommerce website. You got to check it out. And so with that, John, welcome to the show and thank you so much for taking the time.
John:
Thanks for having me, Brett, I appreciate it.
Brett:
Yeah. I'm really excited about this. So you and I had a chat a few weeks ago kind of prepping for the podcast and really we delve into a lot of topics that I'm really passionate about and you are too. And so I can't wait to kind of dive in and allow you to elaborate for our audience. But you said something that I think is really interesting and that there probably won't be a whole lot of objections to, but I still want to start here as kind of our jumping off point. But you mentioned to me that operations are where your profits are, right? And I'm a marketing guy. So I love talking about the latest and greatest with ads, whether that's sponsored products, sponsored brand video, and the Amazon DSP if you're talking about Amazon or Google search and shopping and YouTube, if you're talking about off Amazon, but I do agree with you that operations are where your profits are. Can you elaborate on that though, from your perspective?
John:
Sure. Yeah, we talk about marketing, right? A lot of us get into eCommerce because of product and marketing. You're like, wow, you can move things pretty quickly especially at the beginning. As the business grows and I love marketing, right, the year in the growth mode, right? You're like, oh-
Brett:
Yeah. Absolutely.
John:
Right. And you don't care so much about the spending budget as long as the cash is moving, right? But when you get to a certain size, you have to be able to take a step back and really put on your financial analysis and dive into where the profits are in the business because as you're growing the business constantly on marketing and products, well, what's going on in the back end is whatever channel you're in, they're taking, as we know, Google, Amazon, they're taking a ton of money. So whether you're on Amazon diving into things like your box sizes and how much they're charging you for that, or Google, how efficient is that marketing? Now a lot of marketing people, they'll grow it and then they'll optimize it, right, that back and forth.
John:
But you have to take the responsibility to say, I'm diving into this myself and saying, look, you're missing on these negative key words. Operationally, everything to me, I just divide the business in half, right? Marketing is all sales, right? You have to optimize a listing, you have to get product up, video, X, Y, and Z, and the campaigns going. That's all marketing. A lot of fun. Everyone wants to talk about that. But where is the profits? When all is said and done, you have to dive into that, your P&L and then get even deeper. And I think as entrepreneurs, a lot of us are on that marketing side. So it's kind of like, oh, I'll just keep growing. I'll just keep growing. The reality is you can go into your Amazon account. You can go into your Shopify Store and dig through it and be like, this is right here on the table. And I'll give you a case in point.
John:
We were shipping Amazon boxes and they were costing 40 to 50 cents a box just to ship into Amazon. Well, we flipped that on over to freight, LTL. So we were sending in pallets, 10 cents a box, right? Now when you're at scale, when you're scaling, this is like tens of thousands of dollars. And literally within a week, you just, boom. So I think knowing those numbers and whether you like it or not, some people are naturally good in analytics. Some aren't. You have to put on that financial analysis hat and that's where the profits is, and no matter what it is.
John:
Yeah, so we just look at the business like that. So let's grow over here with marketing and let's find the profits with the operational aspects. And there's so many different things, right? Between employees, everything's efficiencies, right? Just saying, okay, we can send in product directly to X, find a new supplier, right? You can get you new POs lower, right? You reduce a pricing once you're scaling these numbers are big numbers. So that's kind of how I look at it.
Brett:
Yeah. Yeah. It's fantastic. And you really nailed it there. Marketing is fun and I still absolutely love launching a new campaign and watching it grow. And I'll just use YouTube as an example, I'm working on a YouTube course right now. And there's nothing like singing YouTube campaigns scale and start to spend thousands of dollars a day profitably. But you always have to be looking for areas of waste, areas of efficiency that you can take advantage of. And you're kind of always looking for these little knobs, these little levers to get just a little bit better. And I'll actually plug a book that I really love called Atomic Habits, I highly recommend it. But in this book, the author tells a story, James Clear is his name, tells a story of the British cycling team and the British cycling team for decades and decades, they were just terrible. Like bottom of the barrel, never won anything. And then this new guy comes along and he teaches the cycling team to look for 1% improvements.
Brett:
How do we get 1% better in lots of little areas? And so they did things like, hey, how can we choose the right fabric for our uniforms and how do we choose the right seat? And if we put rubbing alcohol on our tires, we get a little bit more grip and just looking for all these little 1% improvements. But over the course of time, that leads to huge improvements. And then the cycling team went on to win five Tour De Frances and hundred world records, whatever, over the course of 10 years, it's a dramatic turnaround. And I think the same is true for business, right? You're looking for these little ways to find the extra five or $10,000 worth of profit here and there. And that actually allows you to do more, right? You find these areas of efficiency. It allows you to spend more in marketing if you want to grow faster, it allows you to spend more in new product development and R&D.
Brett:
And so totally agree with you. You have to know where to look. You got to look for inefficiencies and ways to improve. And so I want to dive into a specific topic, and this is a topic we talked about it a couple of times on the podcast. I think it was Mr. Bill D'Alessandro from Elements Brands that first talked about this topic on the show, but contribution margin. This is a number that I hear really sophisticated business owners talking about and a number that I don't hear many other people talking about. So you want to talk about what is contribution margin and why it's such an important metric for you?
John:
Sure. Contribution margin in a nutshell. So people talk about their revenues. Revenues mean nothing. I mean, they mean something, but ultimately, they mean nothing. It's like what's the piggyback, right? So you starting off and saying, when I talk to certain people in my family, hey, how was your numbers for the year? I never tell them the revenue. I tell them my revenue less my cost of goods sold, less my marketing, right? My contribution margin. So you have to know a product profit per channel, right? Each individual product per channel. And then when you get to that point, you know what that product contributed to the overall business, right? So people have different ways to calculate contribution margin, for me are ballpark numbers is just those two numbers, right? So ultimately, it's post advertising and other fees like an Amazon fee. So it's just your gross revenue, less cost of goods sold, less your advertising fee.
John:
That's kind of where I start because I know what my operating expenses are and those are fairly fixed. So I look at those other two and then you can dive into cost of goods sold, right? We were talking about that before. And then how efficient is your marketing spend? But then from there, I think it's very good, just as a benchmark to say, okay, this product, this quarter contributed this much to the business in this channel, right? So we're going product channel. And just getting to that getting to that benchmark to say, okay, how are we doing?
Brett:
Right. It's really powerful and then you have the simplest definition of contribution margin is just sales, less cost of goods sold, less variable costs, right? And the way you kind of find out these are the most common. So we're subtracting out cost of goods, we're subtracting out marketing. And then some other variable costs, but we're not really worried about fixed costs or anything like that. Our contribution margin is what we used to cover our fixed overhead and things like that. And so then what are you doing once you know that number? Are you creating specific benchmarks that you're trying to hit? What do you then do with contribution margin once you figure it out?
John:
Well, once I do that, then you're discussing that with team members, right? So you have to be transparent within what they're doing. So that's the first step. What we're doing is that. Then the second thing we're trying to do, you can take that and dig into it a little bit further because your fixed costs are just that, they're fixed, right? We need to hit variable costs as best as we can. So I'll go in and see how efficient a specific product is because from there you can say, do we need to optimize the listings? Right? And then you break it down even further. How's the videos performing depending on what channel it is, right? You mentioned YouTube, right? So what can we do for the creative? What can we do if you're on Amazon, optimized in the listings, there's so many things you can do.
John:
So I think what we're always trying to do once you have scaled to the point is to take a step back and say, we still have to bring this down to a very basic level so that those numbers will increase the variables. A variable cost will decrease or something on your sales end will increase because of those changes that you make. But really it's just getting clarity. I think once you break a certain number just say 1,000,000, 1 to 2 million, it gets a lot harder to manage your business. It gets harder to do purchase orders. Managing cash is a completely different business. Let's say if you're under a million dollars, but if you know where your benchmarks needs to be, it's like, okay, we can take a stab at a new campaign, right? Because you know, when you grow a new channel, it's going to be very inefficient at the beginning.
John:
So you're working with your teams, your agencies, and just saying, okay, this is the number that is very important to me. If you want to launch new campaigns, that's fine. We're going to go for how long is it going to take you to get to the point where this number here is growing or it's not. And if it's not, then it's inefficient and what are we going to do? We're going to kill the campaign or give it more time, or whatever we're going to do.
Brett:
Exactly. Yeah, I love the way you phrase it too. It's getting clarity, right? Clarity for you, which is super important, but also clarity for your teams and your agencies and your partners, right? If you're not really seeing what's happening, what a particular combination of product and channel, what that's contributing, then how do you make adjustments? How do you know what you need to improve upon or adjust? And so really like that approach, I 100% agree with you. So let's-
John:
Yeah, and-
Brett:
Yeah. Go ahead. Yeah.
John:
I was just going to say, and then just be transparent. Let the agencies you're working with or whomever you're working with within your company know this is what this is contributing. Ultimately, how good are you doing you're doing your job, right? If you're going to grow, okay, we can grow and it's going to reduce, you're not optimized at the beginning, but in the end, let's look at that number and see if we did actually add to ultimately our piggy bank.
Brett:
Yeah. And you can't improve what you don't measure and you can't affectively improve if you're measuring the wrong things. And so this was really a way to get clarity and to get the right clarity. So I want to transition now, and I want to talk about another metric that I don't really hear a lot of other eCommerce merchants talking about and that's inventory turn rate. And so why don't you talk about that just a little bit, how you think about it, what adjustments you make to ensure that your ROI positive on your inventory?
John:
Sure. The trick can be inventory is simply just how many turns on a yearly basis you're moving the product, right, from when you purchase it. So you're going in, you're figuring out the landing cost of your products. That's everything from your source to the taxes, to shipping, to when it's in the building, right? That's your landing cost. So you have to be able to say, how quickly am I turning this? Because it's a very good balance and check point to say, hey, if I were to sell my business tomorrow, what is the serious investor going to look at? And I think the investors want turns, right? They want to be able to say, and I'll get back into why you want the same thing. But ultimately they're like, how quickly am I getting this product into the customer's hands and then how often am I ordering it? Because once you back into-
Brett:
Yeah, how quickly I'm I turning the inventory into cash, right? I mean, that's really the way you're looking at it.
John:
Exactly. I mean, ultimately you want to be able to look at your business and say, I'm putting in a dollar into my business. What am I getting back each year? And that is not an easy thing when you're in that seven or eight figure range, because there's just a lot of things going on, we're small businesses still and there's challenges there. So you have to work within your working capital, right? But the inventory itself, you might have a great cost of goods sold. Let's say you have a 17 or 18% landing cost of goods sold. Well, what if you're not moving that? If it's taking you a year and a half to move or so many months to move, you only have one turn a year or one and a half turns a year.
John:
What are you going to do? Because your cash now is tied up, right? That working capital is growing. That's a very dangerous place to be. My P&L looks great. Well, you know what, for this product over here, it took you two years to move through the whole cycle of it. Well, what can you do? Go talk to your supplier and see if you can get lower MOQs. Well, go talk to your supplier first, right? Let's get those MOQs down. You've been doing business with them for five years. Let's see if they can warehouse something. There's different opportunities, but you need to turn that product knowing your contribution margin your post aggregate, I mean, your post advertising gross less your cost of goods sold.
John:
Then tying that into your inventory turns is going to allow you to say annually, how good of an investment is this business? Right? Because you should be saying yourself, if I'm making 100 bucks a year, how much does it cost me to get that $100? And a lot of people look at their monthly P&L, well, your working capital is too high or your P&L doesn't matter. You can go bankrupt, right? We've all heard that cash flow is always a problem. When you're growing, of course it is. It's really not easy to manage a business as it starts to take off. So I'm always looking at-
Brett:
Yeah, the main thing I learned from my finance class in college was cash is king and profits don't necessarily equal cash flow. And without cash flow, you're in trouble.
John:
Right. And you need both. You need to get a P&L that's solid, but you need cash to continue to grow your business. So you just want to be able to say I like to use the analogy with marketing and everything else, when I put two bucks into the machine, I know I'm getting the amount I'm due. I don't want to say, oh, what am I getting? So it's the same concept, right? Putting this much money that's being invested in my business, what is my return because if you're putting that much money in, there are other investment opportunities you might have in life, right, that you could be saying, well, let's scratch your head. I'm only getting 10 cents back or 8 cents back. And then a more valuable businesses is three bucks back, right? So think of it from an investor standpoint, whoa, this is businesses moving, they're growing.
John:
And then you can pretty much say to yourself, okay, it's another good benchmark to just say, this is the place where we want to be.
Brett:
Is there a particular inventory turn rate that you're usually looking for or a particular inventory turn rate that most investors are looking for?
John:
From speaking with fractional CFOs, people who do this for eCommerce, they're saying two to four X is what most investors are looking for. So they need to turn that inventory two to four times a year. Once you break four, five times, then you're starting to increase multiples on the value of your business. Assuming, of course your landing costs are there, right? Your numbers still have to beat it. You don't want to be able to go in with your post advertising gross let's just say, and your cost of goods sold under a certain percent. You need to know that percent as well for us, it's pretty high, but our turns aren't as faxed. So there's the balance there, but generally speaking, you want to have two to four turns a year. Who am I, right? I'm not the CFO who sees hundreds of thousands of businesses. I know for us that we'll negotiate with our suppliers to say, look, can you do this?
John:
We're going to buy this amount, but I need this in an MOQ of a third so that I can turn it faster, get more capital, and then we can continue to grow it.
Brett:
So basically the way to look at it, two to four turns a year on your inventory. If you're on the lower end of that turn rate, then you're probably going to want a higher contribution margin, right, which is more contribution profit there per product. Okay, great.
John:
Yeah. And you just work the formula, right? So if you can get a lower cost of goods sold, fine, you can have flow returns, but I think investors, especially today because eCommerce is still in that boom mode, especially after last year and into this year, I think the investors want to see a product that moves. And when I say product, that's how you want to measure it, right? Not just as the business, dive into the numbers. Some people have large catalogs. We'll dive into the 80/20 rule because the bottom line is almost every business has that, right? Not all times should be spent equally the same thing with products, go in, find those top X, 20% that are really turning and then just put more money into it, reduce the campaigns on the slower movers, sell those out, and then go and try to cherry pick some more new products. And then all of those numbers just start to move in your favor and then you'll have less working capital and more cash and opportunity.
Brett:
Love it, love it. So let's talk about some of your favorite tools and resources slash books because I know we talked about it in our prep call at least one really cool tool that you use, and then also a really great book that you recommended. And so you want to elaborate on those just a little bit.
John:
Sure. So for Amazon and our business, we use Helium 10.
Brett:
Great tool. We use it as well.
John:
Yeah. It's a great tool. So they're giving me that number that I'm looking for, my contribution margin on a daily basis. I still have to go in there and pull out, I'll export the products, look at that net margin number. And you also have to look at obviously the actual number that it brings in. You don't need, what is this, 45% net margin do if it's bringing in a couple hundred bucks.
Brett:
Exactly.
John:
So you just look at those two numbers, export that. I love Helium 10. I just love it. I just think it's great, the company is great. The software, it's just a change, right? It literally just says, okay, I don't have to calculate this too much, but again, I need to dive into those products still and to figure out each product's contribution margin.
John:
So Helium 10 is a great product. We like Finale Inventory, it really changed our business model in the sense of that's the hub of the whole business, right? It's not the website, not Amazon, it's this. This centerpiece where everyone can go in, everyone in the business has to know how to use that piece of technology. We're on Magento. They have know Magento, right? They have to know Finale. They have to know a couple of other things, but for the most part, Finale Inventory, and we used to have a custom ERP. We switched to Finale after years. It's just run everything very simply. So it all depends on the size of your business, the scalability, larger businesses, a lot of people gravitate to NetSuite. I'm not going to talk about that because we don't use it, but for us, Finale is a perfect fit and it's rare you get software that's an ERP, that's this strong. So I like Finale Inventory but-
Brett:
Yeah. I love it. And elaborate on that just a little bit. I know you mentioned it. And so I was impressed as you talked about it. And then I went and checked out Finale Inventory, their site, and my buddy Brett Haney from Microfiber Wholesale, there's a big quote from him right on the homepage about how much he loves it. So you're basically using Finale as an ERP?
John:
Yes.
Brett:
Right.
John:
And the neat thing about it was as you dive into it, they've done a great job, but you'll see contribution margins. You can figure that out. And again, I have Helium 10 for that, but you know when the ERP, when they're reporting has a lot of the benchmark reports, the KPIs already built in that is like, cool, I don't have to export this to a Google sheet, do my own calculations. It's already there. And those are the front end reporting where I found that when I reviewed a lot of these other softwares for ERP, they just didn't have it. So it really is a solid tool. We don't have many complaints. I mean, I give it a nine out of 10 so.
Brett:
And you're right. Those things, that is the business, right? That's the stuff you have to manage to continue to grow and thrive. And then you mentioned a book and I should chime in on this because you made the recommendation and I actually got it and read it. But you mentioned that simple numbers, I believe that's the name of it. You want to just talk about that a little bit and why you like it so much?
John:
Sure. I think his name is Craig Crabtree and I mean.
Brett:
Yeah, Crabtree for sure. I don't remember the first name but yeah.
John:
So there's a couple of things that he talks about. He talks about contribution margin, right? It's like, you better know this. So we already went over that. The other thing he talks about, it's a little bit more difficult, but he talks about he gives an example in there. I don't know if you remember about how Bella check is probably one of the best coaches, right? If not the best coach, but you have to manage a business like him. And what that means is he has a salary cap. So he gives the example of, I think it was a defensive back and the defensive back was an elite defensive back. And he was just moving and his contract was up in two years. So he knew this guy is going to demand something like four times what they're paying him.
John:
And he's like, boom, salary caps done. So what did he do? That year, he went and drafted, the patriot is always being good. He's drafted in 28 through 30. I don't know how many teams there are but like 32. So he drafted low. He went out and got one of the premier defensive back and he put them under his tutelage for two years as the author explains. This just worked perfectly for their business model. Right. So he's going to pay someone, one-tenth of what his elite defensive back is going to get in the open market, free agency. And there you go, right? So that's their business model. How do we stay? How do you manage moving parts because the business is going to happen the same way with your business? I mean, yes, you want to always pay your people the best, but you have to have that backup plan, you don't know what's going to happen.
John:
We had people in our technology and they were great. And all of a sudden what happens, monster companies come after them. And you know what, what we're not competing with is those types of salaries for this. So having that ..
Brett:
Yeah, I want you just a little bit, because I think it's such a great analogy. And one thing I love about the book is it is simple. Like the name applies in its ad section, Greg Crabtree. I think that's what he said, but just to confirm, I Googled it. It is Gregory. And so what's great about that salary cap analogy and the patriots. And I will, just a side note, a lot of people are kind of dogging Bill Belichick this year because Tom Brady left, the Buccaneers, won the Superbowl. But let's be fair, right? Tom Brady went to an absolutely stacked and loaded Buccaneers team and not to mock Tom Brady at all, but he did a fantastic job, amazing job. And Bill Belichick he's meant to rebuild a little bit. But one of the things that the Patriots have always been great at doing is maximizing that salary cap.
Brett:
And I think that salary cap is a great analogy because, yeah, to your point, you want to pay your people well. And we always try to do that. Let's pay our people as much as we possibly can, but there's always a limit, right? We can't just became pay our people a million dollars a year. We don't have that kind of money. So that salary cap does kind of apply because we've only got so much revenue right now. We can only grow so quickly. And so yeah, I love that analogy. It's fantastic.
Brett:
Cool. Any from the book?
John:
Yeah, no. I mean, whenever I read a book, I'm like, I just want one thing out of it. I got the contribution margin. I got that understanding, just I think it's like there's moving parts here just because everything is great. Change the analogy of a person to a product, right? This product's great. Okay. It's not going to last forever. There's going to be 500 people coming after it.. so just keep that in mind, whatever that moving piece is, don't ignore it. It's not going away. And if you learn to manage things correctly, I think you can be pretty successful at it.
Brett:
Great. So let's talk about just a couple more things here as we kind of come towards the end of our time, but let's talk about product and product market fit. And then you and I can talk a little bit about the hedgehog concept, which is a concept that Jim Collins pioneered in the book, Good to Great. But can you kind of talk about the way you look at product and product to market fit?
John:
Sure. I kind of break down the business into three steps, product market fit, great profit margins, and then execute, execute, execute, which is probably like 95% of it, right? But the first thing is the product market fit. Once you have that, people find you, it just takes a lot of pressure away and you have to constantly be working at that so that people ultimately want to buy what you're selling them, right? The purpose of the business is to make money, right? I mean, yes, you take care of your employees. Yes, you take care of your customers, but you got to make money. And how do you do that? Well, get a great product market fit. And then you're going to get customers. You're going to have employees who want to be there.
John:
So you're constantly working at that and it can be a bloody ocean. Right? So that's another book I recommend is Blue Oceans. That's a great book, but anyway tying that into your customer and making sure that the product market fit along with the hedgehog concept that comes from Jim Collins' book, Good to Great, right?
Brett:
Right, right. Yep.
John:
That's an incredible book, right?
Brett:
It's a must-read. It's an absolute must-read.
John:
Yeah, it is. But he talks about the hedgehogs. And when I look at my business, I'm just going to say, okay, we have 2000 products, but we have six or eight designs that no one on the market, I'm going to dominate those. I know that there's a market out there, there are private label. We created our own design and I'm just going to say, we are going to form our mound, our hedgehog, and we are not going to lose. And that's what we ultimately do. With what we're trying to always do is add one or two a year, right? So the goal isn't just .. It's going to be we have our hedgehog here. These are our hedgehogs. We're not going to lose them. We're going to grow our market share, market coverage, whether it's on the site, Amazon, Google, whatever platform it is. And we're going to make sure we own that.
John:
So tying those things together, once you do that, I think that everything else kind of plays out as long as you stay focused. It's so easy especially when there's moderate success, it's so easy to go after the next shining product, the next shining business. So just stay focused. And I'm sure so many of your people have said you got to stay laser-focused.
Brett:
Absolutely. And I love that. Just elaborate-
John:
And if you do that-
Brett:
Go ahead. Finish your thought.
John:
No, no, you can.
Brett:
So just elaborate on what the hedgehog concept is. It kind of uses, I think it ties into the parable of the hedgehog and the fox, right? And the fox knows many things, right? The fox is cunning and crafty and sneaky and knows all kinds of ways to get its prey. Well, the hedgehog only knows one thing, right? It rolls into a ball and it's got this spiky stuff on its back and it protects itself. It's simple, it's one thing. Right. And so that's where kind of that focus comes in and knowing your one thing really helps. And it's important in the very beginning, but it's important as you scale as well. So yeah, I just wanted to underscore that.
John:
Yeah. And the other thing I'd say is when you get that, then it becomes a blue ocean, right? It becomes an opportunity where other people can attack you. It can be a great design, it can be IP, right? Something functional you're bringing into the market. But for us, our designs, they can't attack them. And also, you have the higher price points. So you have just a completely different, you can ask for 30% more once you do that to a product. So yeah. That's exactly what it is.
Brett:
Awesome. So really, I have kind of two things left to talk about here as we kind of look to wrap up. You talked about something, once you've achieved some moderate success, which I know a lot of people listening are already there, right? They built a cool brand. They're scaling. They're maybe past that 1 to 2 million mark and they're climbing. What's the toughest thing to do in your opinion, once you've had some moderate success?
John:
I think just human nature, the comfort zone. I want to just go into work every day and check my bank account, make sure it's doing this. Along with other things, but we've heard Bezos's Day 1.
Brett:
I love it.
John:
We look at some of these guys', those numbers, I don't think they mean anything to them at a certain point. They just have a tremendous drive. Why is Tom Brady still playing?
Brett:
Yeah, I mean, who's going to win the seven Superbowl times? I don't think anybody's going to do that, but he still wants to play. He loves the process of playing and competing.
John:
Right. He loves dropping back and throwing a football and it's just a tremendous passion. And whatever his goals are, those internal goals, you have to continue. But to me, it's remaining incredibly uncomfortable, incredibly. It's the cold shower thing, right? I talked to my wife a lot about ADH vac system, right? Because we have climate control in the houses. And throughout time, we have a very convenient life. It doesn't matter where you are. You have heat, right? No matter who you are, you pretty much have heat in the United States, let's just say.
Brett:
Yes.
John:
But coming into work, these successes, everything's comfortable. Turn up the air, it's hot turn. Turn on the air conditioner, it's hot. Right? So we have all these controls out there that are keeping our lives comfortable.
John:
And then when you have your moderate level of success, what are you going to do? Right? Because when we have our interview, they'll hear the same thing for me. My job is to create a platform for you to become your greatest possibility while you're here. And I am fanatically disciplined. You're going to have to be too. That's the person, that's the type of DNA we have here. So if you want to just get into a comfort zone and kind of cruise, it's probably not a good fit. And I think that that's how I try to model my life and just my activities. I'm just going to say, like I was saying, 2020, the word of the year, incredibly uncomfortable because once you do, you get complacent. I don't think you enjoy things as much once all those other things fall into place.
John:
So just try to do certain things on a daily basis, just one or two things a week that's like, you know what, come up with a problem and say, I'm going to fail at this. Just say, I'm going to fail this and that's fine, but I'm going to try my best to succeed. And it's really going to stretch me because when you get to the seat you're running things, you're creating your own playbook, right? So we have to remain fresh and there's competition still out there. But I love the masterminds, the masterminds I mean, they have tremendous value. When you get into the right mastermind and you can talk to the people, but you're learning like, okay, they're stretching you. You've got to do this.
John:
Stop being dishonest with yourself, go do this. You just keep stretching and then having that burning desire to say, hey, I've got to grow more. And I think as you keep going on a daily basis, epiphanies occur more and more. Like, oh, I get that. Oh my gosh. You can look back and say, how can I not get that after doing this for 10 or 12 years? But that's where your growth is. And that's where when you see excellence in any discipline, I think that that's probably one of the things that a lot of these people have. They're not going to be complacent. They're just going to be incredibly uncomfortable.
Brett:
Yep. You have to get used to or maybe with saving, get comfortable being uncomfortable and be willing to lose at something, be willing to fail at something. And sometimes that little bit of failure really creates a drive and a spark and a hunger to do better. And just like the greatest athletes, they just love to compete and then they want to get out there and continue competing. It's not so much about the goal or reaching some moment when you're done because your goal is reached, it's about the process and it's about getting better.
John:
It's a process.
Brett:
Yep. And you actually-
John:
Yeah. I was going to say, Nick Saban, if you ever listen to him, I'm a big fan. But he's just like goals don't matter, right? The process is what matters, right?
Brett:
I totally agree. Yeah. And then because in the book, Atomic Habits as well, where it talks about you don't rise to your goals, you fall to the level of your systems and processes. And so really-
John:
That's it.
Brett:
Yeah. So one last thing here, and John it's been fantastic, it's been really fun. We can keep going here for another hour or so, but what are you focusing on here in 2021 and beyond? And you can talk about any specifics in the business or anything you kind of see or predict that's going to happen in the eCommerce space. So I'm really kind of leaving this wide open, but what are you focusing on here this year and beyond?
John:
I think when I fall back to that incredibly uncomfortable and I think 2020 was just very humbling for us. We didn't know and from March 15th to like, I don't know, May 30th, May 31st, we didn't know what was going to happen with this virus. So it kind of just was like, you had to take a step back. So I just learned a lot during that to say, how are we going to manage this? Because in our business, initially it fell off, social distancing birthday parties.
Brett:
Yeah, can't have parties right now.
John:
We were down like 80% in two days.
Brett:
Wow.
John:
That's kind of insane, right, which has been stable. People have always said, oh, you're in a stable business. Right. You're stable. Okay. There it wasn't. So you just have to be able to really take that hard look. And it's not easy because we were just talking about when things work for so many years, but I just left and I said, you know what, my value as a person is not my successes and failures. The results of my successes and failures. It's not. I've got a family, employees, I care about my employees. I really care about them. And I think that if you keep that type of thought process, then when the sales drop, like last year, I wasn't like, Oh my God. I wasn't freaking out. I was just like, okay. I think people are still going to have birthdays at some point. And there's opportunities. So it was just that where I think I took the step back and I said, let's look at all the other great things that are happening around in life in general so.
Brett:
That's awesome. And-
John:
I know that doesn't really answer your question for 2021. I don't like to predict. I really I'm just like I don't know. I mean, look, what's going on all over the place. Things are moving, going back, some of the things just go back to your systems and try to continue to develop them.
Brett:
Yeah. And then really, thinking that 2020 was a great example how worthless were a lot of our predictions related to 2020, right? Nobody foresaw that a global pandemic was going to happen in 2020 and all the ways we'd have to adjust. So I think looking at where the trends are headed, where the industry is headed, maybe making some light predictions, but then really just ultimately reacting to what's happening and improving your systems and improving your processes. That's really what it's about. So I think that's a fantastic answer. So John, as we wrap up and this has been amazing, thank you so much for the time and the wisdom where can people reach out to you? Obviously, hey, if you need party supplies, we'll all have parties again here in the future, where can they find those? And then do you like to connect with people on LinkedIn and Facebook and things like that? And if not, totally okay.
John:
Sure. You can hit me on LinkedIn. You send an email to me directly, John@discountpartysupplies.com. I enjoy like all of us, right? We just like the conversation. If anyone finds anything, hey, what do you think it is? I love to have conversations and just see if we can help people grow. Right.
Brett:
That's awesome. Sounds good. John, this has been tremendous. Thank you so much. We'll have to chat again soon.
John:
All right Brett. Have a wonderful day. I appreciate it.
Brett:
Okay. You too, John. Thank you. And as always, I appreciate you tuning in and I also want to remind you, we'd love to hear from you, our listener. So what do you like about the show? Do you have any other topics, suggestions and ideas? Hit me up and let me know. And hey, if you think we've heard it, we'd love that five star review on iTunes. It helps other people discover the show and with that until next time, thank you for listening. All right, John. That's a wrap.
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