brand, amazon, products, people, business, called, fba, companies, mass market, amazon fba, months, deploy, selling, market, growth, building, literally, portfolio, investors, opportunity
Neil Twa, Damon Pistulka
Damon Pistulka 00:04
All right, everyone. Welcome once again to the faces of business. I’m your host, Damon Pistulka. And I have a special guest for you today. And can you guess the person that talks about e commerce and manufacturing almost any day, we have a guest today in Neel tois, who has sold over $100 million in Amazon FBA products. He’s been helping people launch brands on FBA for nearly 10 years. And I am so excited to have you here today. Neil, welcome. Thank you. It’s pleasure to be here. Appreciate it. Yeah.
So it’s, it’s great to have an expert like you on today that that has lived live the life for a while on e commerce. And and as we talked, prior to getting on, you really started out in e commerce right out of college. So can you give us a little bit of your background and really tell us about kind of your journey to where you’ve got to helping people launch brands on Amazon. And
Neil Twa 01:04
I try to keep it under like three minutes and save the stuff that maybe nobody cares about except my mom. At the end of the day, very simple. As you mentioned college, I went to college and a full ride music scholarship, classical music and jazz. And in my third year, I realized I was going to die in a van down by the river, not really making any money. I was watching the internet come out Pentium computers, all this really cool stuff. And I was looking at my professors, and I’m like, What am I going to do with this? And they’re like, we can’t teach you any of that. I’m like, I want to learn ecommerce. So like we don’t we can’t do anything about online.
Yeah, I actually have a little website called the bargain guys. Where we were doing enter, you know, eBay style swapping through the website on the canvas. So I had already kind of got my hooks into that. And I thought that would be fun. So I switched to business computer science for all of us semester and realize that was a horrible thing. They wanted to teach me like Fortran and COBOL. And server mainframes. And I was gonna have a green screen. And I’m like, this is Yeah. And I met a guy who said, you know what you should get into this programming called ASP and stuff. It’s a dynamic Server Pages and all this crazy cool stuff. And I’m like, great, how do I do that?
And he’s like, well, you jump out of college and go to the corporate world. And I’m like, Oh, okay. Turns out he worked for sprint in Kansas City. And I said, Okay, well, let me see what you can do. So I started to go consulting got out in the corporate world eventually worked my way into sprint supply chain as a contractor learn how to do programming, built knowledge base, their first knowledge base on sprint, local supply chain, and which led me into sprint PCs, right as the first mobile phones, a brick phone, going to mark and I was like the 5,000th employee.
When I left sprint, after helping them launch their first ever knowledge base implementation project, there was 80,000 employees and 25,000 reps. It was enormous growth. Amazing time to watch that company just explode into the mobile market, which was really just every chance you get to do something. It was innovation, it was upgrade, it was new, new promotions, it was just like everybody was on the cutting edge of everything. Yeah. IBM had a project with a sprint once they got involved. And the partners came in and we’re doing this project, etc. And I was helping leading it and I said, Hey, you know what, you’re doing this pretty well, when you come do this for IBM.
I said, Okay. So they flew me out to Armonk, and they said, hey, you’re an IBM er, now. I’m like, cool. So it literally was the epitome of being the dumbest guy in the room full of a bunch of smart people. Because by the time I got the IBM and I had based all over the country all over the world, I was, I was flying all the time. The guys that I was working with are double docs, and MIT and Yale. And they had these degrees in human interaction, machine language learning, and they were building these semantic engines. And they were working on the Watson computer. And we were doing knowledge management and all this crazy stuff.
And I was just like, I felt like the dumbest guy in the room. But they were just they were super smart taught me a lot. That led me to realizing finally that I had an opportunity come up in 2007, to kind of leave that corporate and kind of say what to do next. You know, I didn’t want to move to Argentina with my division. What did I want to do? I said, This is my chance. You know, let me take this and go. And so I started my own business consulting division. Through that process, I worked in the oil and gas industry, I worked at big tech and manufacturing, like Cummins and Columbus, I got to be my team lead the 2010 census project for IBM as a contractor.
So I got to do a lot of really fun things. Realize that at some point, I needed to get back to what I felt was my core what I had started out doing and that was internet. And so I started into affiliate marketing lead generation for companies I got really good at it. I got to companies to be able to grow exponentially. They got series a funding off the back of my efforts. And then it’s on me one day, I should be making the products that I’m helping these people scale. It was like that moment of epiphany was like, why in the road, I’m like, geez, you got to change. So as I was doing that, a friend literally popped up and said, Hey, did you know you could sell on Amazon? I’m like, Really?
That’s interesting. Because I was a traffic guy all about traffic leads. Yeah. And I was like, Well, how do I get traffic leads and acquisitions for physical products as I’ve been doing already? Can I do it for my own brand? And he said, Why don’t you take a look at Amazon. They have this thing called fulfilled by Amazon. FBA, it was just a company that got purchased by Amazon to help them fulfill their infrastructure. Okay. Operational independence was a really cool component of things I’ve done in the past. That’s the beauty of the internet. Upside scalability is brand new, you can sell products. So we started to test it.
Realizing that a lot of my engineering background and stuff from IBM and the business side and the technical side, were playing a role because Amazon’s a giant search engine for products. And it was like, well, products are being displayed in the pages, how do we get our products to go to number one? And how do we get them to be on the top pages? And how do we get more people to see our products and we spent a better part of two years figuring that out. And once we kind of learned that component by 2012, we were launching our own branded products on Amazon.
And literally every product we launched, we just race up to the top and sales would go and you know, fast forward, people were asking us what we were doing three years later, we had eight brands going, we were just absolutely going crazy. So we started to coach people who wanted to know what we were doing, and started to consult with them. We got to make other people successful, which turned out to be fun, because we really enjoyed that my partner and I started collaborating in 2012.
His name’s Reid large, so super smart guy, he was a CFO of $100 million company, he left that venture and decided what do I want to do next, we joined forces, he’s my right hand tactical, logistics, operational CFO and COO operator, I’m the CFO, more of the operator at the top end of this. And I said, you know, let’s partner together on that side of the marketing and business. And so we’ve stuck together for eight years now. And we’ve launched many products, 1000s of customers made over 20 people, millionaires on the Amazon platform, selling their own physical branded products. And that’s what we’ve been doing.
We have also developed a software and mentorship. And now we’re into acquisitions. Now, through our company voltage, we have multiple holdings, one of them is portfolios, where we actually are now acquiring these companies, we have investors deploying 15 million in capital A quarter, to start purchasing these companies into our portfolios for a 36 month exit, once we start getting these brands within our control, so yeah, move to the whole end of it from the very beginning of launching a brand all the way through exiting a brand.
Damon Pistulka 07:12
Well, it is it is interesting, because you’ve pulled the whole thing together. And and and there’s a couple things behind this too. But it’s, it’s interesting, and I’ll get to the other things too. But it is interesting, because you started out figuring out the marketing on the Amazon platform with FBA, to really be able to get the listings, you know, it’s got to be a good product and everything but it gets worse things to get, get the attention and get where they need to be and then drive the sales that way.
Once you’ve you brought this full circle with now, you’re helping these people build these brands and being a financial partner alongside of them. Because in businesses, and you see this every day, as you launch brands, cash is king and you can you can literally your demand can run you out of cash faster. You know, if you’re if you’re growing quickly on e commerce,
Neil Twa 08:01
yeah, we have to say is saying revenue is vanity, profit entity and cash flow is king, right? Yeah, exactly. And these businesses are cash flowing monthly, weekly quarterly. We build great products, as you mentioned, that have great profitability in them that build profitable brands and of course, they build a big p&l that’s profitable to in the business model. And that is one of the things that’s really matured in the last eight plus years that we’ve been doing this.
We’ve talked a lot of people about brand building, many people have tried to do other things drop shipping, they’ve tried to play around with Amazon thinking that they could just throw up a listing and magically make itself and that’s not quite how it works especially in more of the competition that we’ve seen, you know, was a two lane highway when we started it’s a seven lane highway now.
Yeah, so things are a little bit different. Not you know 80% still the same but that 20% can be a really big struggle for for business people or whatnot who don’t really understand what Amazon wants you to do with the system and how they want you to play with it. People are typically fighting with it and they don’t even realize they’re fighting with it right?
Damon Pistulka 09:02
Mm hmm. So what do you think you know someone say I’ve got a product say I i doing okay, but I really haven’t tried Amazon FBA. What are some of the things that people can see if they if they moved into the FBA and and really embrace that and do it right I mean, because yeah, volume is one thing sure about what are what are what does the F What does FBA really give them in terms of market advantages, strategic advantages, some of the things that you see when you when you put a put a brand into the FBA ecosystem?
Neil Twa 09:39
Well, there’s a couple of things that come to mind. In the answer to that question. It’s the product itself. If you’re selling a product or widget today in this world, unless you’re an inventor who has a patent on that particular product, you will find there’s a lot of competition already in the market and if it’s something you’re selling, and while it’s uniquely yours, and you even may have brand trademarks on it. There are competitors in Amazon selling products just like that already. So we call it found money on Amazon.
Because if you’re not selling someone else’s finding that money instead of you, if you don’t have a presence, I analogize it back to the days to go back to my history for a second. At once upon a time, if you didn’t have a yellow pages, you weren’t a legit business than it was, if you didn’t have a website, you weren’t a legit business. And now if you’re selling e commerce of any kind, or physical products, and you don’t have an Amazon, many consumers are not literally seeing us as legitimate. There’s an equation we like to use in our company called similarity plus familiarity equals trust.
And so why there’s brands developing products within there and becoming familiar to the consumers on FBA. There’s a similarity to those products typically. Because again, they’re not necessarily inventions, they’re innovations on products within the marketplace. And of course, Amazon’s trust comes into play. So when people are moving products in there, there’s a trusted buyer group of people purchasing products, probably just like yours, only, they’re not finding yours. Yeah, ends up happening is with a lot of off Amazon or even off market, if they’re not like selling an online anywhere, any dollars marketing, or whatever they’re doing is ending up online somewhere.
And a lot of times, it’s ending up on Amazon to validate that this is a legitimate business, legitimate company, legitimate product. And if they decide it’s easier to get it, if they can get it in two days with prime, they’re gonna order it from Amazon. Gonna show up. So if you’re doing any of those activities off here, marketing, retail, etc. Even on your own website, if you’re attempting to do the social media traffic, etc. People are ending up on Amazon, we know some of our clients that run over a million dollars in ad spend per month, are seeing up to 18% of that ads been in up on Amazon and deeper in purchasing someone else’s business.
Yeah, what’s his product? So again, we call it founder money. So to get it on, there is literally defined money add value to your channel. And if your purpose is exit, it obviously adds points onto the bottom line for your exit potential when you have multiple channels selling your products. Yeah, so there’s really no reason not to do it. It just has to do with how you do it.
Damon Pistulka 12:09
Yeah. Well, the one thing that you brought up, and we did today, and when we talked before about this is legitimacy, yeah, and and have in your products, even not on FBA. But if you’re not on Amazon at all, and you’re trying to sell your stuff off your own website, and that’s the only place you’ve got it, the legitimacy that you will have by being able and selling your product on Amazon, along with your own website is something that you see a lot and people are gonna they don’t can’t find you on Amazon, then you might be shady or
Neil Twa 12:42
some questions, especially if you’re not a reputable business has been around for 1020 years or more. Yeah, it has a historical base of customers long longevity there, you know, a little bit more of a household name, etc. If you just started up in the last three, five, even even roughly 10 years or so. And you are not seen as maybe a household brand, yet, people are going to find complementary products on Amazon, and they’re going to buy them instead. If you know Amazon only makes up 31% of all e commerce sales in the United States.
So again, they’re not the juggernaut per se, although they do make up a good portion of what feels like a lot of sales, especially in my house, we call it Subscribe and spend. Yeah, not subscribing, save. But yeah, there’s a lot of products moving to my house every week from Amazon. But Amazon itself gives you you know, the ability to go into their marketplace use FBA fulfilled by Amazon infrastructure, it’s like $15 billion dollars they put into this and create economies of scale on that platform with automation.
So as you send that product to Amazon, it will automate the movement of products to the customers, even the customer support in return, giving you the ability to create and diversify that channel without having to put up a new warehouse, or hire new employees, or even get to eight figures in hire 10 employees, right? Seven, multi seven, even eight figure companies we built helped or we’ve ran our clients to that level, we’ll be operating with, you know, five people. Yeah, which three of them are virtual assistants?
Yeah, operating in specific, you know, niches we even have companies that are, are under our control within our managed services where we have a media person who manages that account. We call the general manager and they do the whole thing for the customer. And there’s the whole account. So it creates a really fascinating economy of scale. In this business model.
One of the things we very much love because we don’t have warehouses we used to, we had a 20,000 square foot warehouse once upon a time we were truck rolling about 10 trucks a week through the warehouse had about 12 employees very much understand the complexity of that and the business operations required for that.
What we found was operational independence and upside was not not in the same ballpark as running that with an Amazon system of FBA. shut that down and moved all of our products into FBA. got away from that seller too. And stay focused on the opportunity that it is to create those multi brand multi companies a liability that you can do with an Amazon.
Damon Pistulka 15:08
Yeah, yeah. So when you talk about this, do you see we talk about building a brand on Amazon? Are you talking about a specific product brand? Are you talking about a brand? Say, say I’m, I’m Damon, I’ve got a company. I’m really just, I don’t even know. I mean, auto products, you know, I have the best detailing products across the world. And they’re not mine. I’m, you know, I might have a name brand here name brand here the best I’ve got my I’m doing my social thing, but I sell it all on Amazon. Is that the kind of thing that you see? Or is it somebody has to have their own product, they’ve developed that to really be successful on Amazon to really
Neil Twa 15:47
take success in the market to create opportunity to create upside and automation to create brand value, as well as company value should you want to sell this or hand it off someday. building your own brand is really the only way to go. To get repeat customers to have them come back and buy additional products. If you are a distributor, and you will see the brands that you’re selling are doing very well. There’s actually no reason why you can’t create your own brand, and start selling that as one of your own product lines. It’s not terribly complex to do, it’s what’s called private label. What you’re referring to maybe a little bit more like a white label or wholesaling.
Yeah, what we’re referring to is full on private label where you’re able to brand register it on Amazon as your brand only and then brand trademark that as your unique product. So if obviously, that makes manufacturing. Right, yeah, and of course distribution and logistics. But that’s not terribly complex to do, especially if you have help doing it. We have sourcing agents all across the world that help us with the manufacturing components. We don’t just default to China, where like so many people think, oh, you get all your products from China? No, actually we don’t, we get our product from a lot of different places.
So we haven’t been affected by tariffs and other things. We also make sure our clients have distributed and backup redundancy and they’re manufacturing at different locations around the world. And of course, profitability of those products is very important to build a profitable brand. So again, we’ll those private label products will ensure that we know that three to five competitors, we’re going to go head to head with on Amazon and that want to beat them at their game and become the dominant brand on Amazon, even if no one has heard of our brand. We create brands from scratch all the time, and we become the dominant brand. And it’s not brand label.
We don’t attack things like Nike, we don’t go after major brands, if you will. We’re creating our own version. We’re creating a Pepsi to Coke, okay, we’re creating a Reebok to Nike we’re going head to head but we’re with some of these brands, but we’re creating brands you probably hadn’t heard of yet. And again, that’s where that trust and familiarity of that marketplace comes into play. Because again, solution oriented private label products, give somebody the opportunity to say, Well, this is a problem I’m trying to solve right now. And I’m willing to pay this much to have it solved sooner. Let me give you an example how that works.
You have an abscess tooth Damon, you’re hurting the day you wake up a morning like Dang, that’s gonna hurt I need to get into like the doctor. Now I need to get to the dentist, I got to get this fixed. So you call the doctor you say when can I get you? And he said, Well, I can get you in the next hour for $300. You’re like, oh, an hour, I gotta wait another hour to three. And he’s like, but I get the income right now. It’d be $500. I can get this done in 10 minutes. sold. Yeah, get down there. 10 minutes, 500 bucks, get this tooth out.
Let’s solve this problem. We look for those opportunities in our private label products to solve those problems in 10 minutes or less for someone who’s willing to pay $500 versus waiting an hour for 300. See where I’m going with this? Yep. So with that value perception in our brands, we can take brands and products and switch the narrative just a little bit so people see the value so we aren’t pining over pennies, right? We’re not stepping over dollars to pick those pennies up. We’re looking for where the dollars and the profit, increase and grow, raise our prices, raise our brand affinity and of course raise our profits in the process.
We build businesses that just happen to sell e COMM And we start incubating those products on Amazon to test the brands. Yeah, we’re Business Builders. So we do mainstream. We do take these products, especially once we acquire them in our portfolio. I don’t think I mentioned this, but one of my business partners in portfolios is Kevin Harrington. He was the original Shark Tank As Seen On TV brand guy infomercial creator sold over $5 billion in products. When we take a brand into acquisition, it’s Amazon FBA and has incubated maybe they’re doing six, seven, multi seven figures already on Amazon.
That’s great. That’s just showing all upside market potential for this product. Right. So then we can take that brand and we can mainstream it, we can take it to my client who sells a million dollars an hour on QVC. We can take it into the mainstream market, radio, television, infomercials, etc. We can make it a household name. Yeah, that’s one of the things we do when we acquire these brands.
We look at their stability on Amazon and then we take them in mass market to make them household names. We go the other direction, which seems odd to some people, because I know a lot of people might be considering going the other way, which is I’m off Amazon, I’m in retail, I’m manufacturing over here. And I want to take products on Amazon, right? We look at it both ways.
Damon Pistulka 20:12
Well, and you’re using Amazon as your testbed, really? Because, yeah, you have they have the ad spend. They’ve got the eyeballs, they’ve got people looking for the product. 30 seconds or less all things to all people in 30 seconds or less.
Neil Twa 20:25
That’s the gauntlet basis laid down, right?
Damon Pistulka 20:27
Yeah. Yeah. So I mean, what, what is the traffic on on Amazon now, because I’m astounded at it when you’re doing things on Amazon and how popular a product can really be. It’s really surprising to me to there’s like over 125 million prime subscribers last
Neil Twa 20:44
I looked, there are there’s over 200 million in traffic on average, every month that that bursts over 250 to 300 million during the holidays. I know that they’re doing around 35, I think million a day 33 to 35 million a day. But here’s what’s more important from our perspective, and that is 650 4%, roughly, of all of that is third party sellers like us. Yeah. So about 18, you know, so what does that I’m doing math in my head? Forgive me, it’s 17 to 18 million a day are going to third party sellers like us who are just mom and pop. Yeah, this is small businesses, who were putting brands and products out there. To the tune of about 18 million a day an opportunity.
Damon Pistulka 21:28
Yeah, yeah, that’s, that’s cool. We got a few people have been commenting here. I’ve been on Matthew, Matthew Perkins. He’s asking a few questions. And we can hit those in the under stuff. But he’s, he’s wondering if you just work exclusively with Amazon, or do full full scope with people that are not on Amazon as well.
Neil Twa 21:45
So voltage is our company, I work with my my company as the CEO, we predominantly work on Amazon first in the FBA channel and build that brand, they don’t usually don’t ride what I refer to in the country as two horses with one ass. So in portfolios, where we have the full senior leadership team, once we acquire that brand from Amazon, I now have a team that will take that brand out to mass market, okay, but we don’t do mass market during the incubation phase.
And that could be the first 12 to 18 months of that business life on Amazon incubating the products proving the brand, increasing the profitability, launching additional products into that brand and building that portfolio up and really shooting for seven figures in 12 months predictably, as we look at each quarter, and then we move into annual sales, each brand has to achieve a certain amount and with 18 months it matures. And then we will take it either acquire it or if it’s our own brand, we’ll move it into portfolios and mass market it.
Damon Pistulka 22:42
Okay, really good. Really good. Well, that’s, that’s awesome. And then we, yep, Matthew had a couple questions. But he said those are answered. So thanks a lot, Chris. Yeah, it is pretty good. Thanks, man. So when you look at this? I mean, that’s really interesting to me now, because there are, I mean, you guys are acquiring some brands. But there are some bigger groups out there that are acquiring specifically, companies that have the majority of their sales on Amazon FBA.
Neil Twa 23:19
That is correct. In the last 18 months, over $6 billion has been deployed to purchase Amazon, only FBA business brands. And that is literally in the last 18 months, one of the fastest growing investment vehicles since 99. Yeah, which tells you a lot about where the maturity of this markets going, cuz we’re just 18 months into that, right?
Damon Pistulka 23:39
Yes. And I the big thing for me is I, you know, I work with investment buyers, almost daily selling other businesses and working with them in those kinds of transactions. And the first thing they talk about is, is customer concentration. Yeah, and I always wonder how they get by that comfort level of that Amazon is always going to be good for that brand.
If I’m acquiring is it Do you think it’s the strategy ever have a whole lot of different products and if Amazon makes a change, it’s only gonna affect a few products, even if they made a pretty significant change in what they’re doing that gives the investors comfort in the in the overall investment are good. I mean, you’ve in voltage, you guys are raising money and doing those kinds of things for it, too. I was just one that was one of my questions, but it’s kind of a kind of an investment banking question. Yeah.
Neil Twa 24:29
How to how to look at that. Right. So yeah, for the investment strategy. For those. We’re doing it a little bit differently. We explain the market First, I’ll tell you why. Or why we’re looking this a little different. We’re innovators, right. As I mentioned, originally, I’m it I’ve been an inventor, I’ve got patents. Yeah, really cool technology for the wire and gas in the gas, oil and gas industry for wireline technologies that have to do with transferring data over copper.
But at this level, you find that products on opportunities become innovations for products, right. It isn’t really the inventor that you see with this really crazy unique product. It’s an innovation or a slight twist on an existing product. we’re noticing as these larger aggregators are buying up multiple versions of those brands within these other companies that have been built, creating kind of a larger portfolio and it’s a numbers game, right like thrash eo and others have acquired so much money now, their Ico is going IPO.
Yeah, Carlos got 160 million recently, it the prosper show in Vegas Recently, there was like eight vendors, which is the first time in the history of prosper in Las Vegas, there have been this many vendors who are aggregators. They are all taking the first arrows in the back. They’re the first to market you know how this goes. We’re not even in the early adoption of the bell curve. So they’re getting a lot of arrows in the back right now. And one of the things I see what we’re doing differently against where the market is headed as we’re coming in number two, because it’s okay to be number two, yeah, the market is to watch how they’re actually going to be falling while they’re not falling apart.
But they’re running into some major issues with growth they hadn’t necessarily anticipated. And it always happens with early adopters. Yeah. And this is that they are going to have to cut the bottom line off of quite a few of those products in order to maintain growth percentages and investor expectations. Yeah, oh, something line at the CFO level, some brands are going to fall below that, while acquired while just trying to pick up market share while just spending as much capital as the investors want to deploy into this. They are just picking up anything with a heartbeat.
Yeah, what they’re not really doing is making amends with the amount of staff required to do that. I know for one, one instance, one of the people shared with a friend of mine who was at prosper. He told me a story about how one of them came up and said, Yeah, we got like 50 people running brand management campaigns in what’s called sponsored ads on Amazon’s buyer traffic network inside of Amazon. Yeah, they’re 50 people. That is insane. He runs a PPC management company, and they have no software, no automation. So literally, they’re just throwing Warm Bodies at this problem, which you and I both know is gonna create some major problems here shortly. Yeah.
So as we saw that, and as we’ve been watching the market go for a while now and watching people go, our investment strategy went totally different. It is we’re going to establish brands on Amazon that and we’re going to look for brands that are established in our certain criteria that has upside independence, operational independence, has mass marketing, appeal and potential for household names. So while we’re looking for Amazon FBA brands, we also specifically are looking for their ability to go to mass market.
That is an innovation, if you will, in terms of where the Amazon aggregators are go who were who were specifically focusing on just FBA businesses. Yeah, we’ll even look at businesses that have say a Shopify website or other you know, type of sales WooCommerce or whatever, have a good established potential brand, have maybe tried Amazon or necessarily haven’t open the Amazon channel yet. And our team, being the experts, they are could quickly deploy that brand into Amazon and open that channel very quickly in the market share, and then have a multi channel opportunity, which is where we go anyways.
Yeah, we’re taking a slightly different version, our investors like that, because number one, they’re actually buying the asset directly. So we’re almost in a broker relationship, in a managed services business, outsource our business process. outsourcer, if you will, a little bit yeah. To borrow corporate terms for anybody who might understand what that means a managed service is insert inserting itself into the buyer seller relationship, where we validated the due diligence level that this company has its, you know, market potential upside and mass marketing.
It’s presented to the investor groups who then determine if they want to buy that when they buy it, they’re buying it directly from the seller, not from us. So we don’t need to go through all the investment rigor morar, right? Yeah, we provide a due diligence package. And so as the value of this brand that’s purchase price, its inventory, its upside for capitalization. For go to market growth, once it’s acquire, we enter in a relationship with them to make it 100% passive for the investor. So that comes into our company and is fully managed by Yeah.
And then then 12 to 24 and 36 months, we have operational expectations of growth and strategy to take an asset purchased it three to 4x and return it at 48x with the whole portfolio growing and basically double in size and 36 months for full market exit.
Yeah, so we’re going after the two channels where the aggregators are only staying on one and I see that as a huge opportunity because guess what’s going to happen David, we’re gonna pick up Quinn very good fire sales here in about six to 12 months on brands that were really good. Probably a little mismanaged by the larger aggregate Yeah, and have tremendous upside will swoop in for pennies on the dollar and pick those up and then be able to take them to mass market really fast.
Damon Pistulka 29:35
Yeah, yeah. Yeah, this the well and you look at the mass the the mass, the mass buyers, yes, the Amazon FBA I mean, they, they literally are buying just to deploy capital. Because when you look at some of the websites, it’s like we can turn turn and burn you know, 45 days you can you can have your business sold, you know, blah, blah, blah, blah, blah. And, you know, yeah, but but in the real in the real world. Yeah.
Outside of that. I mean, deals deals just don’t get done that fast if you do a proper diligence, and that’s, that’s what I see is that they they are deploying capital to be deploying capital. And yes, they are going to take some arrows in the back. It is exciting, though, how they how they are able to do this because I think that in the future, this, this will be much. It’ll be much more commonplace, obviously. And it’ll be more commonly
Neil Twa 30:30
will, right, just go three to four years out. Yeah. I haven’t seen capitulation in the market. We haven’t seen consolidation of the market. Yeah, we haven’t seen aggregations between the different brands and various businesses that’s coming as any number of ghosts, we will see that in what we’re planning is a tortoise and the hare race.
Yeah, as we’ll see this go along, we’re gonna see some major changes in the market in the next three, four years, and we plan to be in part and in fact, we’ll be aligned to either be purchased by a larger aggregator or even a spec, or one of these others because we plan to go for profits and portfolio not mass brand acquisition, we’re looking at 36 good businesses, any smart investor knows, obviously that if you’re going to deploy a certain amount of capital, it obviously depends upon the investors capabilities, I could deploy a million someone else can only deploy one. It really gets down to if I could deploy 10 or 20.
Should I deploy it in 1 million increments and to 10 companies? Because one of those companies mass market can make up the rest of the nine? Yeah, now you’re looking at a slightly different structure. And that’s kind of how we’ve approached it with our investors. Our acquisitions are going to be between two to 5 million our EBIT are ranges between 250 to 1 million. So we’re actually targeting brands that are very different than those aggregators. Why?
Because we’re looking for the uniqueness of those products and brands and the mass marketing appeal where they’re not they need to get the 1 million plus EBIT up because it’s only Amazon. Yeah. So we don’t have to do that. I look at the one that’s at 250 EBIT. And I say well, dang, I can make that a million in just Amazon only in the next 12 months while adding on the additional outside mass marketing channel which could do a million a month Yeah, so we look at this very different approach I wouldn’t use 36 of those I don’t need 360 of them which is yeah and different than the way this is appearing
Damon Pistulka 32:14
well when you comparatively right I’m I’m old manufacturing guy whatever you want to call it that’s that’s I grew up in and the roll ups that you saw those kinds of industries many years ago with people actually understood the industry right and we’re able to do that it’s very similar what you’re doing but you’re doing it on Amazon and and understanding the Amazon and the mass market.
You a got the Amazon which has the traffic which Nii commerce that’s that’s why i Amazon such a behemoth with the traffic, I still go back to that I’m still amazed that every day, you’re your real differentiator, as you said the aggregators that they don’t have the the technology or the capabilities to really understand how to launch brands and grow them on Amazon, they are missing out on the biggest opportunity that really springboards for the other mass market opportunities.
Because once you create that you create that brand knowledge of that brand awareness, right you get from from being on Amazon and being popular on Amazon with a with even a smaller product popular, right Amazon, right, that gives you enough to really launch into the mass market, like you said into the other the other channels where you can really really
Neil Twa 33:28
what I’ve seen in my eight plus years of doing this, as many sellers on Amazon really don’t know what they’re doing, even the brand owners and there’s always five points of opportunity that we look at initially with each of these, as we consolidate them into shared services within voltage, we lower their cost and overhead and increase their profitability relatively fast. by consolidating their bookkeeping, financials logistics back in, obviously, Cost of Goods can be changed through our own manufacturing and redundancies, they typically don’t have the knowledge and experience to do what we do to turn these around very quickly.
Many of them that are maybe doing six figures could easily be doing seven figures, but they lack the capital in the knowledge to get there. And that’s areas where we step in and really help take that out. So Amazon is a big market channel opportunity before we even get to the mass marketing. Having been Harrington for over six years having him come on at the senior leadership level is fantastic.
He’s brought his son who’s helping us with the front end brand marketing and product, distribution and direct to consumer. My partner of eight years reads in there are a VP of m&a Laurent is 20 plus years in the m&a space, then brought in another partner who is a two time Emmy Award winning videographer for a show called success in the city. His name’s Brandon t Adams, and he’s doing all of our brand mass media videos and for production. So again, I feel like the dumbest guy in the room was in very smart people.
Damon Pistulka 34:52
Yeah, well, you say that and understand you say that out of out of humility, but but the you know, it’s really the team that you put around You would would arguably go against that. Yes. Okay.
Neil Twa 35:06
We have plenty of time to argue because you’re all you know, type A personalities. Yeah, I like to just think of myself as one of the best cat herd Wranglers. I just tried to keep them all from like fighting and moving in the right direction. I just, you know, their cats in suits that sometimes like that, you know, do this like Yeah,
Damon Pistulka 35:20
yeah, no doubt about it.
Neil Twa 35:22
It’s gotten good at wrangling people. That’s basically what I do.
Damon Pistulka 35:25
I still the uniqueness of what you’re doing is is is really cool to me because the pure power the traffic in Amazon in these niche products, and then turning them private in private labeling, you know, or, or and then working on the manufacturer and getting that working right, using Amazon FBA and their traffic and the and the the technology and the way that they can fulfill and do the customer service is really takes a lot of headache out of growing those brands.
Neil Twa 35:54
It really does cuz we got a very super smart PPC campaign manager who oversees that, who has a software that helps automate it. So he can oversee multiple accounts through the automation of our templates that we’ve used to grow to eight figures, we basically plug that in, and it’s all equation by the numbers. There’s no emotions, and so it’s a business Yeah, we run everything by the numbers and and so because of that, we can keep it all and keep it small. And that’s the way we kind of like it.
Because again, it’s it’s two different stones I get the mass marketing appeal of the aggregators, it’s kind of like going to Walmart, right? Yeah, you get the mass appeal. That’s great sell to the masses, you know, eat with the classes, I get all of this. At the same time, there’s always that unique aspect of some of those shops around the corner. The smaller ones, the price cutters, etc.
The unique markets a Trader Joe’s, that actually do very well too, and are also very profitable, even not at the same size, they have a different segmentation, I kind of see as being like the Trader Joe’s of Amazon’s, if you will, yeah, we’re we’re kind of cutting out a segment that’s a little different. And, again, early market segment, while Amazon has been around for a long time, selling a lot of products, this new aspect of the model is very unique. And it literally has to do with cultural and marketing shift. We call it the wealth without Wall Street move. So many investors are looking where do I deploy my capital?
Do I put it into things like infinite banking? Do I stick it into real estate and shareholders? Do I put it into other companies? Do I put it back in my business? Do I? Where do I deploy this capital, right, and many don’t realize that ecommerce is a really great way to do that you get the both the digital and the physical product aspect of the inventory. So when you’re buying these companies while they feel digital, which is a bit of a kind of a brain thing, they have physical inventory. So yeah, physical assets as part of that purchase, right? Yeah.
And when people start to realize that they see it a little more like virtual real estate, like purchasing multi tenant buildings, which is another way to deploy capital, right? by deploying multiple into multiple businesses, you obviously get the returns of the whole portfolio, as opposed to looking at it, you know, just as a one by one basis. So we give investors that opportunity to build into their portfolio, multiple brand purchases, their 100%, passive quarterly returns, yearly returns, and of course, an exit opportunity when we mature the whole portfolio. So it’s a Yeah, it’s kind of a wealth without Wall Street move where to deploy capital.
Damon Pistulka 38:10
Yeah, yeah. And I can, I’m thinking in my head, how it would look differently when you when you have a, you know, a $10 million a year, company brand that you’ve built on FBA? I mean, you can literally run that with a few people.
Neil Twa 38:28
I know a number of people who do that we do that it takes about five people. Yeah, it’s a totally different way. And, you know, I always thought that was really weird, Damon, but if you’ve ever been in the oil and gas industry at all, yeah. Or around it, have you ever walked into some of the offices in Oklahoma, where they’re running a billion dollar oil and gas company with, like, 20 people? Right? It seems really weird. But yeah, I’ve walked into a number of those offices. And they’re like, Where is everybody?
Like, you know, well, we don’t need any more people. So different types of times, there’s different economies of scale. And, you know, we realized long ago, building more warehouse or hiring more people is one way to go. It creates its own problems, its own logistics, its own overhead, its own challenges. And many people discover that in the last 18 months with so much that happened in the world.
We can deploy very minor amount of people in contract based growth and percentage of growth positions that incentivize them through their expertise and knowledge and ability to execute on our key objectives. We can deploy them into very large growth environments and literally even multi seven figures on Amazon is still an incubation period for these brands. Once you take them to mass market they could be 20 $15 million your brands
Damon Pistulka 39:40
Yeah. It is really fascinating talking with you now and you know when you think about building these companies like you guys are helping him and building it through FBA a because the the risk of scaling is so much less like you would with a normal as you said, I’m gonna go out and lease a warehouse. And then I had to lease more of them and really, anymore. And this is what’s kind of the, the dirty secret that people don’t want to understand and in my commerce a lot of times is, I can’t just have one warehouse anymore.
If I really want to be a brand, I have to get my shipping down. And that only that only comes from having multiple warehouses in the locations where your customers are to get them there and a couple days and, and those kind of things. You look at that, that that financial risk and that risk of, you know, being in those different locations, you can really do a lot of that with the Amazon FBA model. And really can
Neil Twa 40:37
we still deploy some of that into third party logistics like, well, we don’t own a warehouse anymore. We use independence on three pls third party on each side of each coast. We can deploy those products into Amazon as we need them. So we have kind of a just in time inventory on manufacturing to three PL to Amazon or directly to Amazon as we have space. My business partner is a logistics mastermind, and has set this whole thing up in such a way where it’s not only doable, but it’s coachable, teachable, we get others to understand how to build that for themselves. Yeah, we don’t have any warehouses anymore. Yeah, to hold any of our products.
Damon Pistulka 41:13
Yeah, I have. I have seen that before in some of our clients where we had them where they had their own their own facilities and use the FBA. And that is a really, that’s a very effective way I think to is to to minimize your risk until you know that that facility is really going to pay for itself to have two or three or four it
Neil Twa 41:31
is and you’ve got to balance out both of market, you know, Amazon grew at 60% of the fourth quarter of December 2020. That was Yeah, hyper growth situation. Yeah, they’re having more growth to this year than ever before, where warehousing is getting a little bit limited. They have what’s called ipi rules or how much you can sell your inventory. We used to have billions of units of storage space now we have millions now there’s a lot when you’re moving a lot of product, it can be kind of a little bit troublesome. So we just backed up more of our product into the three PL is it more just in time into FBA to kind of overcome that?
Because we’re running like a business? Not a side hustle or a hobby? Yes, we have overcome this, but many are falling out in the marketplace right now. They mean quite frankly, holes in opportunities opening and Amazon for many people who don’t realize this, because many of these companies are falling out. They simply couldn’t keep up the inventory and logistics in order to ensure product supply and demand was met. Yeah. And they ran an inventory. And that’s a bad thing to do on Amazon. Oh, yeah. Lose spots? Yes. Ranking us traffic. Yeah. run out of inventory. And yeah, in that growth come through, and of course helping to manage our clients through Yeah.
Damon Pistulka 42:37
So how big of a deal this is? This is a little bit off topic, but not really. How big of a deal was it when when COVID and everybody started buying with e commerce for you guys managing companies? Was it like, he just woke up? It was like, Oh, I guess we’re not getting sleep.
Neil Twa 42:52
shorty Tony was very different for us than most people. It was like Christmas all year long. We saw an average of about 35 to 40%. Increase in 2020. Yeah, it was all upside on the business. Yeah, I know. That sounds very strange. And maybe it sounds like being braggadocious in the middle of so much trouble that occurred. But quite frankly, eecom was there to be a support network for many people who couldn’t shop or didn’t shop previously or couldn’t travel or couldn’t go to the local store anymore. Yeah. You know, never having gone on it before they got on it for the first time. My parents were one of them, right? Yeah.
Not wanting to purchase on Amazon. Now. You can’t get them on their cell phones where they’re clicking and buying stuff on Amazon and getting it shipped to their house. That was a pivotal change. And I think a lot of that adoption in 2020 is what’s occurring with what we’re seeing on Amazon now. In fact, one of the first companies that was original Amazon brand called anchor is about to be the first one to go IPO completely on Amazon FBA. Wow. And that’s one of the things that’s trend setting and what Amazon sees and its brand building and why it’s increasing its brand building capabilities. Its increasing its people and manpower to support brands.
It’s giving the ability to do things they’ve never let us do like send direct email broadcast to our sellers. Buyers, excuse me, inside of Amazon, new targeting options for brand new brand referral programs that give us the ability to take off Amazon traffic from websites, social media, etc. and monetize it against our own brands by sending that traffic back through our own brand link earning up to five to 30% in referral fees for ourselves, which has never before opening a new era of off Amazon marketing. Yeah, that’s been sort of a weird area for the last eight years plus when they never let us do that. We had some ways to do it.
That was sort of sort of a way but we tried to keep it as wide as possible. But they’re really showing that brands are where they want to go. And that’s where the market meets its opportunity, no doubt. And so ecommerce really exploded in the last 18 months. We saw now there’s a dip. We saw a dip this year. We saw the first quarter and stuff come back down but you have to rationalize those numbers and reconcile From 2019 forward, if you saw 20 25% growth in 2019, you saw 40%. Maybe you’re only seeing another 20%.
You lost 20%. You know, if you’re still ahead or on average from 2019, you’re about on pace. Yeah. So the numbers look a little weird, frankly, if you were to look at the p&l on these companies, but they’re averaging above, where they should be, but we typically see 63% growth in our brands every year over year organically, which is why we love the brand building component. As we get more people and you get consumables they buy in three months, or two months, or one month. They Subscribe and Save your products, and it creates quite an interesting business model.
Damon Pistulka 45:41
Yeah. Yeah. That’s, that’s for sure. And that, that way, what you saw in your businesses is what we saw with clients as well, as you know, yeah, that 35 to 50% growth, just because of the spike and then an increase in spending and, and then we have some clients too, that do some of the, the safety kind of products and that was a real, you know, the, the supply chain was was so crazy. And honestly, a lot of them just quit selling. We just pull all the listings down across all the platforms, because you can’t, you know, if you if you it was it was literally you could you could get a you know, containers, multiple containers of products in and it wouldn’t last for hours kind of thing if you’re in so it was pretty hairy in those times.
But yeah, it’s interesting now is, as we see, some of the brands we’re working with are continuing to grow the multi channel brands and stuff. But you’re right, it’s it’s at a much slower pace in the last year and and rightly so. So, yeah, still tremendous upside. Oh, yeah. Yeah, I mean, this See, this is a thing because do you think I go back to I go back through 2020? Yep. accelerated the e commerce buyers. Yep.
By years. And that’s all and it’s not going to come back. I don’t think I mean, I look at myself, right. I, I’ve, hey, I help people on Amazon and other platforms and do different things, not the way you guys do it. Obviously, what we were doing that the m&a and the other kind of work we’re doing to help them grow in their multi channels. But even even me doing that much I found myself and my family with, with boxes from Amazon and other places on our doorstep almost every day. And that hasn’t. Yeah, and that hasn’t stopped. Really? No, I
Neil Twa 47:32
like I said, I call it subscribing spend in my house. I haven’t been Yeah, my house. The women, you know, is the biggest demographic on Amazon. Yeah. makes up like 80% of their sales. And so many of them who couldn’t go shopping, retail other places during that timeframe turned online. And yeah, they just they knew Amazon was there. Maybe they didn’t use it as much or whatnot. And they became a bigger adoption of that. Right. And you know, it’s interesting, you asked about the future earlier.
And I kind of forgot until just a moment Bank of America and Forrester Research did an ecommerce prediction last year on where they saw the model changing, talked about flexing their muscles, right? They said by 2030, they predicted that up to $23 trillion was going to move from the retail online offline into the online. So the sales channels are changing. The determination is when you want to get involved, you want to get involved in three years when it’s harder or right now and it’ll be easier.
Yeah, decision from a strategic perspective, if you were involved in in 2019, you would have wrote a pretty good way of last year. Yeah. So wherever year people are waiting, as they as I talked to them, I’m telling him Don’t wait any longer. Like you need to get moving on this. Yeah, it’s a big opportunity to get ecommerce out there and truly get in front of people who are buying products. That’s that’s the opportunity, right? That’s for sure
Damon Pistulka 48:47
that for sure. Well, Neil, it’s been awesome talking to you, man, I just I, I am. I am blessed to be able to listen to you and be able to ask you the questions because your knowledge flows and and you’ve done this with these brands and helped them a lot. And so if someone wants to reach out to you, what’s the best way to get ahold of you?
Neil Twa 49:09
Yeah, I mean, we can make it pretty simple. You just go to voltage, dm, calm, okay, on my websites information, there’s a very good case study video, you can check out. There’s information on how to text me after you sign up for the free training and just take a look at what we do and investigate it a little bit further. And if it makes sense, you’ll talk directly to me because I don’t mess around. Yeah, with people. I’m only looking for those who are very serious about building businesses with a potential exit.
Damon Pistulka 49:33
Very good. Very good. Well, thanks so much. Thanks, everyone, for listening today. I have Neil tois. From voltage, voltage holdings. I always forget this voltage holdings on with us today talking about building Amazon brands on FBA. And then if those brands are successful, they’re taking those brands into the mass market opportunities and how he’s helping people do that today and some of the technical aspects of it.
And I just appreciate you so much, Neil, for calling and sharing that because there’s a lot of people that are thinking about e commerce or on e commerce. But hat don’t get to listen to people like yourself. Just talk about this and share the information. So thanks so much for being here today.
Neil Twa 50:16
Well, thank you. I’m honored. I appreciate your time here and spending some time with your listeners today.
Damon Pistulka 50:21
All right. All right, everyone. Thanks once again for joining us. We’ll be back again next week with more guests talking about life and business.