E175: An Interview with Mike JacknessAugust in Ecom-Crew-Podcast
Hello everyone! It’s Dave again bringing you what is perhaps our most special episode yet. Today we have Michael Jackness on the other side, this time as an interviewee. In these podcasts, we often hear Mike talk about his real-life experiences in running an ecommerce business. What many don’t know is that he got his start in digital marketing as an online poker affiliate back in the early 2000s. On this particular podcast, Mike shares what it was like to start this kind of business and scale it to become a highly profitable company. Aside from the highs, he’ll also delve into the lows of being in this industry and reveal the reason why he finally decided to retire.
Mike had a personal interest in poker from an early age. His grandfather and uncles gambled and he grew to enjoy it as well, particularly the thrill and skill involved in playing poker. He got started as an affiliate in early January 2004. While playing on an online poker tournament one night, he was also surfing online poker websites. While browsing within the PartyPoker website’s terms and conditions, he stumbled on the affiliate page. Essentially, the site was offering $50 per person for people who can bring in 1-9 players a month and $70 per person for those who can bring in more than 10 people a month.
Mike thought he didn’t know enough people personally to make money out of this venture so he gave away a book through a penny auction on eBay. Around this time he reached out to PartyPoker and struck a deal that he would be paid $200 per person if he could have 200 people sign up on a monthly basis.
This was how PokerSource was born.
Mike founded this company with a cousin and a friend. In its heyday, it would reach profits in the seven-figure range. The trio would move operations to Costa Rica in 2006 but would suffer a setback shortly after due to the Unlawful Internet Gambling Enforcement Act. He would retire from the industry at the end of 2010, which is great timing as the infamous Black Friday took place on April 15, 2011.
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Full Audio Transcript
Dave: This is Dave, and welcome to this episode of the EcomCrew Podcast. So, today I have a very special guest on today’s show. It’s none other than Mike Jackness. So, today I’m going to interview Mike of his prior life before e-commerce. Now, if it was me and we’re talking about my life prior to e-commerce, it wouldn’t be that interesting. With Mike, he has an extremely interesting story about the business that he ran prior to e-commerce.
Now, Mike used to run one of the largest poker affiliate companies in the world. At its height, it was making literally millions of dollars a year, not in revenue, but in profit. And at one point, Mike even had a significant ownership in the Canadian Poker Tour. Now, if you know anything about poker though, you might have heard about a certain day called Black Friday. Now, Black Friday did not happen in November in the poker world. It happened on April 13th, 2011.
And on that day, the US government decided to shut down basically all of the biggest poker sites in the world and also forbid Americans from playing online poker. And as you can imagine, that had some pretty devastating effects on Mike’s business. So, the story that we’re about to tell is interesting for a few reasons. Number one, it’s a fascinating story into the world of digital marketing and online marketing. If you’re like me, even though you are in e-commerce business, you’re probably a spun of anything digital marketing and online marketing. And this is a really interesting story just about online marketing in general.
Number two, this is a story about how to scale a business quick. And Mike definitely did that very quickly with this previous business, and he’ll give some insight here on how to scale any business really quickly. And number three; this is a cautionary story about what can happen in business. You can have everything taken away from you in a second even if you did nothing wrong yourself.
So, with Amazon quickly monopolizing e-commerce, I think having our businesses shut down for one reason or another is a big fear most of us, and Mike should be able to give us some interesting perspective in how to deal with this in any business that you run, whether its e-commerce or anything else. So without further ado, let’s get on to the interview with Mike Jackness.
Mike: How’s the going Dave?
Dave: It’s going well. I think we talked about…
Mike: Now I feel like the pressure to perform here is pretty high because you made me sound interesting, a lot more interesting, I think than I am.
Dave: I mean, I think it’s a really interesting story. I know a lot of people when they first meet you, and they start to hear about the story about the poker affiliate business that you used to run, it’s just an enormously captivating story. And it’s one long overdue to tell on EcomCrew. I don’t know why you’ve been so hesitant to actually talk about; I think you’re just eating a piece of humble pie and you don’t really want to talk about this former glory that you used to have. But like I mentioned in the intro, it’s really interesting I think for anybody in the online business space.
Mike: Yeah, I mean it was definitely a neat marketing story, a neat business story. And some things I miss from those days, some things I don’t miss it all. But it definitely was a fun time in my life and I guess the rest is kind of history.
Dave: So, I think the best way to start things off is why don’t you start at the beginning, and how you actually got into the world of poker?
Mike: So, in the poker in general, I just had a personal interest in it. I have a family that kind of likes gambling. I think in general it just it kind of runs through — not my parents ironically, but like my grandfather, my uncle, my cousins, my second uncle all like really in the gambling. So I was just around that type of thing a lot growing up. But poker in general, like I found a lot more interesting because of the skill aspect and the mental aspect. And it felt like a lot less like gambling, although having that gambling streak in you definitely I think can help your game if you do it correctly.
It can be bad if you’re constantly just gambling and making bad decisions. But if you have the ability to take chances and not freak out about that, it can definitely make you a better player. And so, it stemmed from a personal interest, which I think is one of the best reasons to start a business. I wish that I had had that same personal interest in some of the e-commerce stuff that we’re doing, although I do indirectly. We’ve talked about some of that before. But yeah, I mean, I was personally like going up to Atlantic City at least once a month. My grandma lived up there so it was easy for me to go up there and visit her, and go play poker.
I was having a poker tournament at my house once a month that was starting to get like completely out of control because there was no parking left in the neighborhood. I was worried about having the police come. I was playing online poker multiple nights a week, and I was just really in the plank.
Dave: Yeah, well, it’s interesting. We’ve talked to so many different people in e-commerce. And I think that’s like the one fabric that holds a lot of us together is an interest in poker, especially during a tie, I guess in the early 2000s. I know I used to be I wouldn’t say like a compulsive poker player. But definitely during university before I started my e-commerce company, it was basically what paid for my beer growing up through university. And I’ve talked to a lot of other people in e-commerce and for whatever reason I think poker is kind of that one common interest that a lot of us have.
Mike: Yeah, it definitely is really interesting. I mean, I come across a lot of people that not only were in the playing poker on a personal level, but a lot of other people who did exactly what I did. I mean, I eventually became a poker affiliate, and got really deep into the affiliate or the poker industry and a lot of those people have those same faces or names I hear a lot in the e-commerce space.
So it’s interesting. I don’t know exactly what it is. I think if I had to put my finger on it, I think again, it’s the ability to make large bets and to feel comfortable placing an order for 10,000 or 25,000, or $50,000 on a brand new product because the numbers back in the online poker days were just fantasy land and you become jaded. And to make a business decision for $10,000 after you’ve gone through that is like no big deal. Even though I know it’s still a big deal, I get that’s a lot of money.
Don’t get me wrong, but you develop the ability to see an opportunity and take it. And if you have a 51% edge, you should take it. That was basically how it always was in poker. You like very rarely did you ever use some poker lingo to be like all in with 100% chance to win. There was always a chance that someone could get really lucky in most cases and still win the hand. And so you were comfortable with that like comfortable with the fact that yeah there’s a 70% chance I’m going to win right now, there’s a 30% chance I might lose everything. But as long as I can keep doing that over and over again, over time, I’m going to win. And that’s a very similar parallel, I think, to e-commerce.
Dave: Interesting. So when did poker turn from a hobby into a business? Like what was the very first thing that you did to take it away from gambling at a table or on online poker room to actually making it a business? And I think the beginning; you can correct me if I’m wrong involved poker sets and eBay.
Mike: Yeah. So let me tell you exactly how that came to be. And it’s weird how sometimes I can’t remember like literally what the hell I talked to you about yesterday. Most the time, that’s how it is. I just, I don’t know, like so many things that happened, it’s hard to keep everything straight. But there’s some things you remember like crystal clear, even though they were 15 years ago. And I can literally remember sitting at my computer. It was one night during the week playing online poker.
It was like early January of 2004. And you could only play one table at a time at that time. Now you can do what’s called multi table and we can play like eight or 10 tables at once. And basically you’re like mentally stimulated to the max. You’re just constantly like full, full, full call fold, just like all over the place. But at this time, you could only be on one table at a time. And poker in general was a pretty boring sport if you want to call it a sport. You’re folding most of the time and waiting most of the time.
So, while I was in that like kind of just folding and waiting method or mobile, I was playing this tournament one night, I was literally just clicking on every single link on Party Poker’s website. I was like looking at all their different tournaments and looking at like their terms and conditions and their rules. And I mean, it was like reading the back of the napkin holder or something like really ridiculous like how boring it could be like playing poker. And one of the things in their footer was the word affiliate. And I had never heard that word before, like at least using the capacity that they were talking about it like affiliate marketing.
And I clicked on that page. It was a very basic page. It said, if you send us one to 9 players in a month, we’ll pay you $65 for this player that you send us, and if you send us 10 or more, we’ll pay you $75 a player. And that exact moment was like how the business got started. There’s some more things that kind of happened after that when I — like I sat there like while I was playing the tournament, and by the time I went to bed that night, I had come up with the business model that would become what was called Poker Source Online was the name of our company, our website. It still actually exists today. I just have nothing to do with it.
But yeah, that evening I was like, you know what; I don’t know enough people to like make a living off of this. I’m always thinking big, it was I know 10 people to like maybe get signed up to this and that’s $750, that’s not going to make a difference in my life. So, I was like how can I get 10 people a day, or 50 people a day, or something to do this? And that’s where the eBay component came in.
I was basically like, I’ll give away — at the time, the first thing I did was give away a book. And it was I’ll give away a book in exchange for people signing up for online poker. And I did a buy it now auction on eBay for a penny and the payment had to be signing up through my affiliate link and I would send you the book, and that’s how the whole thing came to be.
Dave: So, was that completely compliant with Poker Stars at the time? Were they okay with you incentivizing people to sign up under your affiliate link?
Mike: So, I didn’t know that, I didn’t even inquire about that. It was actually Party Poker. Poker Stars had not existed yet at that point. It was Party Poker. I didn’t ask them, I was like, let me just try this and see what happens. What I found out later is that it wasn’t actually TOS compliant with eBay. That was actually a bigger problem than it was with Party Poker. After the first month, I think I did something like 50 or 70 players I sent for the free book. And after that first month, and it was actually a partial month that was January, I emailed them at the end of the month, and I’m like, look, this is what I’m doing. I do want to make sure that this is okay, because I’m not sure this is against your Terms of Service or not.
So I did do that afterwards. And then I said like, look, I think I have something here, this is going pretty well. So, not only do I will make sure this is okay but I’m curious like if there’s any other thresholds, if I send you more players can you — is there a higher tier of what you’ll pay me. And what they wrote back was, what you’re doing is perfectly fine. Thank you for letting us know. And if you send us 200 players in a month or more, we’ll pay you $200 per player. And when I got that email, I can still remember, that’s another thing I remember getting that email, I was like, holy — this is a family podcast.
So just imagine the word I was going to say there. And just in typical Mike Jackness mindset, my thought was, oh, I can now make an additional $125 per player. My thought was now I can give away a bigger gift. And that’s where the poker chips came in because the poker chips at that time cost me $90 a set and we got that price way down with volume. But when I first devised of this, I was like, well, it’s going to cost me $90 a set to buy these chips. I’ll make 110 bucks per signup that I send over and that became like instant wildfire. We did 1,000 the first month, like 2,000 the second month. I mean, it went absolutely crazy from there.
Dave: And all of that revenue was coming strictly through eBay.
Mike: Yeah, that’s actually another funny story. I don’t remember the exact day that this happened. But I remember the phone call like again like it was yesterday. So what was happening was eBay kept on shutting down our listings and they were saying, you’re doing is against Terms of Service. And what they would do was they would email me and say, like this particular segment, the wording of your listing here is incorrect. You can’t do this, so I would change it. And I obviously like I didn’t want to try to like bend the rules. I wanted to be TOS compliant. So, I kept on fixing what they were telling me was wrong each time.
And I didn’t realize the underlying issue was what I was doing that was actually what it was against the rules was asking for a different form of payment other than cash. That was basically they’re like, you can’t do this. It’s like a bait and switch even though that isn’t what I was trying to do. I just didn’t fully understand what their issues were. And if you read through Terms of Service, it’s clear as mud typically. And I went through and I didn’t really understand exactly what the issue was. I had emailed their support, wasn’t getting a clear answer.
And so meanwhile, like in parallel to doing this on eBay, we had started our own website called poker Source Online. And I was very delicate about, I had another job and I was sort of — I didn’t want to be working on this stuff while I was at work. I was getting paid six figures and it was important to me to make sure that I was still performing at a high level at my job. So I’d come home at night and work on this website. And we launched the website at like two o’clock in the morning. I’m absolutely exhausted, I go to bed and the phone rings at like 5am, and it’s my cousin, who’s actually the one that runs this business now.
He was a DJ on morning radio in Washington, DC. He was like the morning DJ; he was a pretty big personality in Washington DC radio. And he worked the 6am to 10am morning drive radio shift doing — he had a partner that that he did this with. It was like a guy and a girl team on the radio in the morning. And five o’clock in morning he calls me like on his way to the radio station, he was my partner like early partner in this thing. And he’s like; we just got our eBay account shut down. So, three hours earlier we had just launched Poker Source Online and so the timing couldn’t have been better, I mean I was definitely like in luck sack mode at that point.
So our eBay account gets shut down but at this point we had already done like thousands upon thousands of these promotions, of these signups. So, I went to work that day and I came home that night, I’m like well, I guess we’re going to have to do an affiliate program ourselves like a program ourselves to get this website off the ground. And that’s what we did. We paid people $20 for sending us up — for them to send us somebody to Poker Source Online. And we already had like I said, thousands. I mean we probably had five or 6,000 people that had signed up to that point.
And that’s what really pushed us to the next level because 20 bucks is a lot of money to people. These are all people who had already gotten a free set of poker chips, so they were like holy crap, this actually works. This isn’t a scam which was a lot of people’s reaction to it to begin with. And to this day, I mean we’ve lived off of that trickle of people sending us players the affiliate revenue ourselves because it’s a pretty unique opportunity. It’s hard to be a poker affiliate yourself and get people to go sign up. But it’s easy to get people to go sign up if they’re going to get a free set of poker chips when again in luck suck mode, it happened to be that poker chips were like the number one gift in Christmas that coming year.
I mean, you got to put yourself back in 2004. So this is something everyone wanted. It was worth like a hundred and something dollars, kind of at the right place at the right time. I picked the perfect gift and Poker Source Online went to like the stratosphere after that. I mean, once we launched, it went absolutely besonkers [ph].
Dave: Interesting. So, people were coming to Poker Source Online through the affiliate program which you were giving I guess affiliates who send — every customer would send you, you would give them $20, and the customer that would come to Poker Source Online would get the free poker chips for signing up.
Mike: Right. And I got 200 bucks. So like my net still was like 90 bucks. And we actually got that way up by eventually we ended up buying a container full of poker chips, which is something we’ll talk about probably here in a little bit. But we definitely got our costs way down. And we also overtime got our payments in the poker rooms way up because eventually competition kicked in. So, they were throwing money at us left and right. It was kind of a crazy time.
Dave: Interesting. Okay, so trying to frame the time here, 2004 you start selling on eBay. Eventually your eBay account gets shut down. Was that still in 2004?
Mike: Yeah, I mean that was really early on. That was like March 2004, April, March, April 2004. So we were just a couple months into it, yeah and they shut our account down at that point.
Dave: And so around mid 2004, you start an affiliate program, getting people to come to your website in exchange for poker chips? How were you getting those initial affiliates, just through word of mouth through the eBay sales people that had previously bought poker chips now you’re offering them $20 to come to Poker Source Online? Is that kind of the flow there?
Mike: Yeah, I mean it was actually very early email marketing. So, like we had everyone on our email list. Again, I didn’t know what was going on or what to call it or what even to think of it at this time. And certainly there wasn’t any classes, or anyone else to talk to about this because it just didn’t exist yet. 2004, it doesn’t seem like that long ago. But in internet time, it might as well been like the Dark Ages. It’s crazy like how much things have changed. And I don’t know, it just it was instinctive to me to just email everyone in our email list and say, hey look, we have — Poker Source Online is now launched. We have this affiliate program. You’ve already gotten a set of poker chips from us for free, like now tell your friends about it and you’ll get 20 bucks.
Dave: Do you remember out of curiosity what the email program was that you used to send out those first 1,000 emails or 2,000 emails? Was it MailChimp back then?
Mike: It definitely wasn’t MailChimp. My recollection, I can kind of vaguely remember being on Yahoo mail and actually like manually sending like ten emails at a time to be able to do it.
Dave: I still remember as a side note, my very first email campaign about 30 customers and it took one customer put it in to field and took 29 other customers and put their names in the CC field, and emailed them all one blanket email.
Mike: That’s definitely what I did. I just I think I was doing it, it was in the BCC field.
Dave: See, I wasn’t even that advanced to know about the BCC.
Mike: Yeah, I think I literally think I did it through Yahoo mail. That’s my recollection. It was a long time ago, and I don’t remember 100% for sure. But I think that’s how I did.
Dave: Interesting. Okay, so mid 2004, things are starting to take off with Source Online and it’s just kind of grown organically through your email list. At some point though, you must have started on SEO and paid traffic.
Mike: I did. Paid traffic was a very quick stint though, because and it’s a shame because it was one of these things where like you give a dog red meat and then you tell them a week later that he can have it anymore. It was crazy because again 2004 so like cost per click at that point for PPC was like even for the crazy term poker was cheap. I mean, it was $1 or $2 or something ridiculous. When you’re getting paid 250, $300 a sign up, you don’t need a very good conversion rate to make that math work. And that was a lot less work than what we were doing on the other side of the house with the incentivized marketing where we actually had to physically ship products to people.
But Google relatively quickly shut that down. They made a blanket Terms of Service adjustment that you could not bid on gambling terms for whatever reason. There were some other things that got caught up in that as well. I forget exactly what they were. But yeah, so like pretty quickly within just a few weeks of me figuring out like how to do Google PPC and realizing like how much money there was to be made at doing that because we could bid more than anyone else that was competing against us because we were getting paid more, because we already had a relationship with the rooms like relatively quickly that was giving us more than the rack rate for affiliates. And then I just got rid of it. So that was that was a shame.
And then from an SEO standpoint, that was also something that we started working on around the summer of 2004, which is also when I quit my job. And I didn’t know what that was; I literally did not know what SEO was. It didn’t even dawn on me that like I type things, and I think again, it was Google had just come out around that time. But like Yahoo was my preferred search engine. I was like on Yahoo Mail because I mean, I had been using the internet at this point for like 5, 6, 7 years. I think I started using the internet like in 98; maybe it was even before then. Actually, it was even before that. I was still using the internet in like 96 and 94.
Yahoo was so big at that point and Google was like just coming on the scene. So, I would search for everything in Yahoo but hadn’t like — I wasn’t smart enough to put things together that like I want to rank number one for this stuff. It just didn’t even it didn’t – AMB didn’t come together yet at that point, because I was so wrapped up in other parts of the business. But we did start indirectly working on SEO because one of the things I thought of early on was we can make a community, we can start adding a bunch of content here and become kind of the go to source for a bunch of stuff.
So, we put up a bunch of content like actually pretty good content about starting hands for Texas Hold’em of about implied odds, part odds, all these different like higher level concepts for playing poker that most players weren’t thinking about, like the importance of position at the poker table. We also put up profiles of players, ones that you would see on television that were like the famous people that were on TV, and we put some profiles up about them and things like that. And then, I noticed at some point probably by the fall of that year that we were getting traffic for that stuff. And then that’s kind of when that aha moment came together and we actually started working on it.
And this was during a time when like you could have a white background with white tax and just spam the hell out of stuff and put it on your page and you would rank. Again, this is 2004, so there was some pretty crazy times thinking back to like just how the game was played back at that point and what we were doing for rankings. But yeah, SEO definitely became a tool for us in our tool chest.
Dave: So 2004, it’s kind of you and your cousin running it, doing some different tactics of SEO, affiliate marketing, this type of thing. So, from 2004, and I’m going to jump ahead a little bit here, when was kind of like the height of your company, and then we can kind of backtrack and what happened in between there to get to your height?
Mike: It depends on what you would consider the height. If you consider height like the year that we made the most profit, it would have been 2006. If it was the year that we had the most revenue, it would have probably been 2008.
Dave: Okay. So somewhere around 2006, 2008, that was the heyday I guess, of your company from 06 to 08.
Mike: Yeah. Well…
Dave: So during that height…
Mike: The reason — there was a couple — what ended up happening was we were growing like bonkers. I mean, we were growing it like, I don’t even know what percentage 10X, 20X a year. I mean, it was — I mean just absolutely nuts what was happening at that point.
Dave: And went on, that 20X number just to kind of frame it, what kind of revenue were you doing for example, like in 2004? What was your revenue and then like 2005? And obviously this is a long time ago, but just a rough, are we talking enough to replace your six figure salary?
Mike: Oh, yeah. I mean, I quit my job. I mean, I was making like $120,000 a year in 2004. I mean I had a good salary, I had a good job. And in July of 2014, this is like five months after I quit my job, I was writing myself a check each month that was almost as much as I was making in a year at my job. I mean, it was bonkers. And I actually think by July, it was more like more like $50,000 or something. It was obviously still like a sick amount of money. And so I put my notice in on July 1st of 2004.
And it was like just this really awkward timing thing because I had been in this job for seven years. I was Employee of the Year the year before, like in 2003. And I really liked my job and really unlike a lot of employees, I really appreciated the company for giving me the opportunity to be able to be there, for the money they were paying me, for taking a chance on a younger kid because I was young when I took the job. I mean, I started the job in 98. I was 22 years old, and was by far the youngest executive at the company.
I was just very appreciative of the opportunity and felt like because I had run other businesses in my life and growing up as an entrepreneur, that if I was going to be an employee somewhere that I wanted to treat others like I wanted to be treated and to do a really good job and not be that other group of employee. So, when I knew that I was going to quit, it was actually pretty tough for me. But I went in on July 1st, gave my notice. I was like look, there’s never going to be a good time for me to leave, I know it’s going to put you guys in a bad spot, but this is what’s going on in my life. I got to take this opportunity, I’m making almost as much in a month as I’m making it a year here and it’s fun, right?
Mike: So I gave them a month’s notice. And I was like look, I’m going to give you guys a month’s notice. But the thing that was like really awkward about it was I was leaving for vacation like the next day for a two week vacation. And I was like, look, like again like leaving and telling you the day before I go on vacation and telling you the day I get back from vacation like either one is not appropriate. But I’ve been planning this trip for six months. I’m going to go on vacation. And the month notice starts when I get back from vacation. So you really got six weeks here to go find somebody to replace me. I think that that’s pretty fair.
And it was funny. I came back from vacation and my boss was like, when I talked to you about what we talked about before you left, did you change your mind? I think he thought that I was like, I was going to train my mind, that I was like I was crazy or something. I was like, no, I can’t believe you guys haven’t found someone yet. And I don’t want to take up too much of this interview from this particular part, but I ended up not leaving until the end of September because like they didn’t want to let me go.
Dave: The bug didn’t, time for you to stay.
Mike: The bug yeah. The last month I was there I got paid more, I think they paid me double what I was making normally and I worked on my own stuff the entire time. And that was actually the stipulation was like you come into the office, you can work on your own thing. If there’s a problem, you’ll stop what you’re doing and fix it, or if we find somebody like you can train them. I was like yeah, that’s definitely fun. I want to leave you guys, but like the end of September I was like this has to be it. I mean it was absolutely ridiculous at that point. I think by that point I was making more by September.
So yeah, I mean the revenue in like 2004 would have been over a million dollars because I mean it was actually…
Dave: And that’s nearly pure — well I guess not pure profit, but probably roughly 30, 40% of profit.
Mike: 50% yeah, something like in the 30% range, definitely was we definitely hit seven figures. I don’t know the exact number. That was a long time ago. And then the following year it got even bigger. Again, it’s hard to remember the exact revenue numbers, but definitely mid seven figures. And then what happened was like what I was saying was that there was a big difference between profit and our revenue curve, because what happened was there was actually like a couple of really big dates in online poker. One of them you mentioned was Black Friday, April 15, 2011.
The other major thing, the first major thing that happened was in — it would have been September or October of 2006. So, what happened was in the summer of 2006, we decided that we wanted to move to Costa Rica. And we went down there and we had friends and people that we knew that lived there that were in the online poker community. We flew down, took a trip and the three of us was my cousin Peter, or the partner Peter – I’m sorry, my cousin Jay, my other partner Peter and myself. And we went down there and just kind of took a tour to decide we wanted to do this or not.
Our thought was basically, we’re going to move down there and it’s like lower tax setup. It’s not a zero tax stuff because you still have to pay taxes on your worldwide income as a US citizen, but we can use that as a home base and kind of like live the fat happy life. And it was summer of 2006; we decided to buy this like what we call the compound. It was four homes for all of us to live in and one of them was going to become our office. And we decided we’re going to move down there in September. Basically, I got married in August, came back from our honeymoon. We went to this Affiliate Marketing Show that was in Vegas because we were living in Vegas at the time. And the day after the affiliate thing was over; we flew down to Costa Rica.
I was down there for two days and this thing called the Unlawful Gaming Enforcement Act, UIGEA passed. It had been under all of two days. We still didn’t have internet in our house. I was sitting out on the patio stealing internet from my neighbor, because we were just moving down there and I find out about the UIGEA. And that was the first like big blow to our company.
Dave: And to put it in perspective, the UIGEA what exactly happened with that?
Mike: At the time when it passed like no one really knew. It’s a typical US government like poop show. So they pass this law, a couple of senators had a bug up there around about online poker. They attach it to a port security bill and snuck it through like in the middle of the night. And no one really knew what the outcome was going to be like. There was mass hysteria of like, is it going to be completely illegal to play poker in the United States at this point? Is it going to be legal to be a poker affiliate, to have anything to do with poker? No one knew because the law like literally had not been written.
But what ended up being written and it took a couple of years was to make it illegal, because they knew that if they want a certain angle with it, it wasn’t going to pass like a test through court. So, they made it illegal for financial institutions to process transactions for online poker. That was what the law eventually became.
Dave: Yeah and if I remember correctly, basically what happened was that players had to roll their money through an intermediate, so intermediary source rather than deposit directly into the poker sites themselves.
Mike: Yeah so this is actually where people that ultimately end up going to jail got themselves in trouble because the way that they did the intermediate source was to make fake companies. So, they basically would set up a separate like a fake flower shop or a fake dog treat store and encode their credit card and checking processing differently to allow it to go through, so it was fraudulent. And that’s what they ultimately got in trouble for. The few people that went to jail relayed on the poker. It was that that really got them in trouble and not the rest of it because again the law said you can’t process the financial transactions, and you can’t get around that by defrauding the government or the financial institutions.
Dave: Yeah, so a player like me you take $100 and through deposit to another company and they’ll say I bought $100 worth of flour has been really that $100 was ultimately going to one of the poker sites.
Mike: Exactly right, yeah it was definitely pretty convoluted. But the good news for me like personally is that it didn’t make what we were doing illegal at all. We never had to worry about us being an affiliate if we were doing anything wrong, like there was never any question about that. We were just basically an advertising company for these rooms. We certainly didn’t make any decisions on their behalf or I mean this is not like wink-wink. I mean, legitimately we had nothing to do with them. I mean they were just paying us to send them traffic, so yeah.
Dave: So from 2006, it was a scary moment but nothing really rocked your business at that point.
Mike: Oh it did for sure, it was awful. I mean what ended up happening was — so there were several poker rooms that pulled out of the United States when the law passed because they weren’t willing to do this trickery. And one of them was Party Poker who was our biggest room at the time. One of them was like [inaudible 00:35:47] that basically like all the legitimate companies that were trading on the UK Stock Exchange, companies that were in a free country like Britain. I always joke about this because we always say it’s a free country in the United States, but then stuff like this happens or they tell you that you can’t play poker in your house. It makes me definitely a little bit bitter.
But these were companies that were trading publicly in other free countries like the UK and they knew that they couldn’t keep on accepting players from the US. They were just put in this awful spot because they’re publicly traded. So they pulled out, and Party Poker was our biggest room at the time and most of our traffic was coming from the US. And most of our profitable traffic was coming through Party Poker through a promotion that we were running called Instant bank role. So yeah, I mean it chopped up our revenue probably — it probably chopped off 50 to 75% of our revenue in like one day. It was a pretty gross day.
Dave: Interesting. So at that point, what did your company look like? Was it you and your three partners in Costa Rica, or did you have other employees at the time as well?
Mike: Yeah, we had a couple of employees, we had — I think we probably had between five and 10 employees down there.
Dave: In Costa Rica?
Mike: In Costa Rica. We had moved everyone. We didn’t want any employees left in the United States at that point because we wanted some particular tax treatments. We didn’t want anything in the United States. We wanted legitimately a company that was outside the US to help with our tax situation. And we had probably somewhere right around five to 10 people. And it was a pretty gross day. I mean, like I said, it chopped off a ton of our revenue. But the thing that ended up happening — and as I was saying it was a big difference between like our revenue and our profit. We ended up in a pretty interesting position because I was one of if not the only like trustworthy people in this industry.
I mean, if you can think of all the stereotypes of online gambling, they were pretty true. I mean, it was a pretty dirty, pretty deceitful industry, people with questionable moral characters. Let’s just leave it at that. And there were several poker affiliates that were in the United States that were rattled by the UIGEA passing. They also had multimillion dollar businesses and they also weren’t willing to like move abroad, or didn’t even know if that was going to make a difference. I mean again, it was no one knew what was going on. This law passed and everyone was in just complete panic mode.
And we ended up picking up four seven figure poker affiliate sites for no money. We paid nothing for them. We ended up doing like a profit sharing deal. We ran them in perpetuity and gave them a part of like I think all of them got 50% of the revenue, so of the profit. So, it was a great deal for us because we basically acquired eight figures with the business of revenue and basically became like a management company for them. And it was a great opportunity for us and we definitely did very well through that time. So, that helped get our revenue back up but our profit during that time really hurt because we had to hire a bunch of employees and there was a lot of other like particulars to it as well.
Dave: Interesting. I’ve seen this happen in some of your e-commerce companies. You’ve structured similar deals, so basically, all these poker affiliate companies; they wanted to wash themselves of any liability, so they gave these companies to you basically for free in return for profit share.
Mike: Exactly yeah. I mean they legitimately became like a silent partner in the business. They had zero authority to do anything with the sites. We ran them and just wrote them a check each month was our — and the thing I’m proud of, I mean not that this is like anything to be super proud of, but I’m proud that we went through that entire time and paid them everything that they were due and never had any issues with any of them.
Even through some other hard times and things that went on, we made sure that they were taken care of, and it worked out well I think for everybody. I mean they were in a situation where they didn’t have to worry about it anymore. They can go do something else with their lives. And we were already down in Costa Rica like doing this stuff and we did what we were good at which was running the show.
Dave: Interesting. So at that point, can you give a ballpark of what you were doing in revenues potentially I guess before and after you UIGEA?
Mike: Yeah I mean before — like I said, like I think before this went down, we were doing probably around 5 million a year in revenue at probably like 40% net profit margin, something around that or pretty darn close to that. After you UIGEA and everything shook out, it took about a year for us to acquire these other businesses and get everything set up. We were doing well on eight figures at that point. And our net margins were certainly lower at that point as well, probably 20% or something or 15% after we had to payout partnership fees and we definitely had more expenses by this point. We had to get — we had 66 employees at our peak. So I mean, that’s a big staff and then also taxes and everything else that goes with it.
Dave: When did you have those 66 employees? And yeah, what year and then were all those based in Costa Rica?
Mike: Yeah. I mean, I’d say 60 of them were. The vast majority of them definitely were. There was a couple of people in other parts of the world. That would have been like 2009, I think was the time that we probably hit the peak number of employees. But the poker industry kept on going, it was one of these things where like we were now — so we had a business that was built on quicksand at that point. After the UIGEA passed, it was just like you build your business back up and correct for that and then some other awful thing happen. And then you build back up again and like another awful thing happens.
So it was like basically like we kept on hitting lower highs and lower lows every year like the kind of graphs are going up and down up and down throughout the year, which is like the slow downtrend because the next thing that happened was net teller which was like the big payment processor they pulled out. And then obviously, you mentioned already Black Friday in 2011. That was like the ultimate doom. And we got left being owed over three quarters of a million dollars. I mean it was awful. We had three quarters of a million dollars basically in a checking account in these online poker rooms and we’ll never see that money. So it was pretty, pretty brutal.
Dave: So from 2009 again, you have another really good year in terms of revenue maybe not profitability, 60 employees and then 2011 Black Friday happens. Is that a fair assessment of kind of the timeline in between?
Mike: Yeah, and then when Black Friday happened, that was like when we — I mean we already kind of were downsizing at that point anyway, because it was again it was a shrinking industry but…
Dave: Did you know — why was it shrinking because just the poker was not as popular anymore or because things were turning down on Americans gambling?
Mike: Yeah, so I mean the problem was, the reason that online poker was so successful like at its peak was because of the US market. I mean the US market, like it or not, the United States is the biggest richest country in the world. I mean the biggest, not obviously in terms of population but in terms of wealth. And so, there’s a lot of people with disposable income in the United States that would go on online poker and lose 100, 500, 1,000, another thousand, whatever dollars playing online poker basically with the fish, that if you use poker terms of the fish and then the sharks, the whales, the people that were making money as a living, they were the ones winning that money.
But over time like when the UIGEA passed and certainly like once Black Friday passed it was like that’s a basically eliminated online poker completely. When the US dries up like so did the rest of the pond, because this was like a worldwide network of players, but like there just isn’t the same amount of money coming into the system. And like poker in order to work needs more money coming in that’s going out. So it’s like this delicate ecosystem. Like if you think about the ocean, if you had a situation where the sharks had nothing to eat because every other thing in the ecosystem died, then the sharks would eventually die too. And that was kind of the same thing that happened. All the minnows and the goldfish were just kind of disappearing and then that was the result.
Dave: And so April 15 comes, do you remember the day, like can you walk us through that day like including not just for you but your other staff members and partners as well?
Mike: Yeah, it’s another funny…
Dave: Paint the picture for us.
Mike: Yeah, it’s another really funny story actually. And another one of those days where I remember it clear as can be. So, one of the things we haven’t talked about yet, is I actually left online poker and at the end of 2010 I just had had enough. I had had enough of I put my heart and soul into the business as you kind of know from seeing what we’ve done in e-commerce. I’m just like an all in kind of guy not to use the poker term. And it was definitely emotionally like had taken its toll on me like putting everything into it and it was still kind of going down. I really just don’t like that environment. I have much more fun, obviously when things are going up, it’s more fun.
But aside from that, because that wasn’t really the main issue, the main issue was just like the people. Like I said, I just I did not enjoy the environment that I was in. I was around people that were excessive to like the extreme. They were spending money like — the people that own these poker rooms or other poker affiliates were spending money like it was never going to go away and in like the most rude manner. And they were going to a restaurant just be like give me the most expensive bottle of wine. I saw someone drive a car to a pool one time just to like because they thought it was cool just to show that they could waste more money than the next guy.
It was like living in real life Brewster’s Millions, it was ridiculous. But not only were they excessive in spending money but they were like really rude to people that they deemed were like inferior to them because they didn’t have money. And then they were also like in the drugs and prostitutes and just like all kinds of other stuff again, that you would kind of imagine in online poker. And it was just a very cutthroat business because everyone was going after the exact same thing. Everyone wanted to rank number one for online poker. That was like the gold term and or some poker room bonus code or something like that.
So, it wasn’t the same kind of atmosphere that you have in e-commerce, everyone has like this awesome camaraderie, and they’re all like family people and like do good things and it’s just really fun. It was very, very different than that and I just I’d had really had enough. So, at the end of — I had kind of put my notice in that I didn’t want to be doing this anymore to the people that were in the company at that point like six months like in the summer of 2010. And at the end of the year, we turned the company over to my cousin who still runs the company today and I have not messed with it one bit since then.
So on April 15, 2011, I was sitting in an RV on the coast of Oregon retired, and back then Instant Messenger, AOL Instant Messenger was still a thing. And one of the guys that was like involved in absolute poker, he was like the affiliate manager guy, he was like our contact there at the time. And I was good friends with him, so like I still had a relationship with him after the fact. He IMs me at like 9, 10 o’clock in the morning, he’s like can you go to Absolute Poker real quick and tell me what you see. So I go to absolutepoker.com and this website has been seized by the federal government. There’s like an FBI badge on the page.
Dave: I remember that.
Mike: And I was just like — and so my answer to a question to him was like is this like did you guys get hacked because I didn’t think it was real and he didn’t think it was real. He’s like we’re trying to figure that out right now. And I’m like a minute or two later, he IMs me, he’s like can you go to ultimatebet.com which was their other site, they own both of them. And it was the same thing. And then probably like 20 minutes later, he’s like, can you go to Full Tilt Poker and it was the same thing. So, Full Tilt Poker Stars, Ultimate Bet, and Absolute Poker, like they all got seized by the government.
And like I honestly can tell you that I was completely indifferent and did not care. I was like, because I was out of it at that point. We had made enough money; I didn’t care about the money. I didn’t care about like what the repercussions were. I was like, that’s about right. It was kind of like — and I went on about my day, which I actually remember what I did that day. We went down; our dog was still with us then. And we took him on the RV trip. And we went down to the river and through the tennis ball around for like an hour and a half and went on like a little hike down by the river. And then when I got some seafood off, like just fresh off taking the boat, and that was the life I was living at that point. I was like completely like I just don’t care about this anymore.
Dave: Wow. That has to be one of the most incredible psychological market timings ever to remove yourself from that three, four months before that happened. Was it pure fluke, or did you kind of see the writing on the wall? Like I’m sure you’d seen it on the wall, but maybe the wall was further out than it might have actually been. But do you sense that this was something coming in the imminent future in terms of months rather than…
Mike: No, it was a complete fluke. I had no idea that the government was plotting to do this. They’re really good about — when you think about something like not to get into politics right now, if you think of something like the Mueller investigation right now, they don’t talk about this stuff, they are tight lipped. When they come down with something, whatever it is, it’s like a hammer going and everything all at once, and you’re not getting out of it. And that was basically how it was with these sites. They had so much evidence that I mean, you weren’t going anywhere at this point.
And what also happened that I didn’t know it was going on, all — well, not all those rooms, all the poker stars were running a Ponzi scheme behind the scenes which is also just kind of par for the course of this industry. Ultimate Bet, Absolute Poker, and Full Tilt Poker were — the owners of the company were paying themselves with player deposits because they weren’t able to support their lavish lifestyle without stealing money from players. And these are people, I mean the people at Absolute Poker, they were paying them themselves a million dollars a month. That was like their salary. And that wasn’t like enough for them. They still had to go steal money because they needed more.
And this is just crazy to me, because I mean that’s just so much money, like what the hell could you possibly do with a million dollars a month, and then say that that’s not enough to the point where you’re making a million dollars a month like legitimately. And then you go and start stealing money from players because you need more and then ultimately destroy your business because you can’t survive on a million dollars a month. Like that’s the kind of people that you’re dealing with here. And that was why I wanted to just get the hell away from it.
And I didn’t know they were doing that. I wholeheartedly had no idea that they were doing that. But when I found out about it, like a couple of weeks or a couple of months later once all that information came out, because we found out we weren’t going to get paid like there was money that we had that got ceased, that three quarters of a million dollars that I was talking about. I was definitely a little pissed at that point like when I found out that I wasn’t going to get paid the money that was due to me. But again it was pretty much par for the course. I was not surprised in the least bit when I heard that.
Dave: Yeah, and the interesting thing is I believe very few of those guys actually ever went to jail for it. They had to give back a lot of money but a lot of them still didn’t get any punishment so to speak for it aside from financial repercussions.
Mike: Yeah, and a couple of them are like really prominent celebrities in online poker like Chris Ferguson and Howard Lederer.
Dave: Howard Lederer.
Mike: I mean there’s not a lot of people that I have real will ph] for my life but I don’t want to like say anything too outside the lines here on the podcast, but like I mean I hate those guys. I have so much — because they owe me three quarters of a million dollars. And not only did they steal money from me, but like a bunch of other people I know in the industry and all the players.
The players ended up getting the money back for the most part because Poker Stars ended up funding. It’s convoluted and we probably don’t have time to talk about that on the podcast today. And you’re right, like very few people went to jail. One of the guys that went to jail I knew pretty well because I lived in Costa Rica with these guys, and he was actually like the one like kind of family guy that was down there, and he was not really that bad of a guy. And he was just doing what he was kind of told by his company, figure out a way to like make these payments go through.
And I’m sure that he knew that he was doing something wrong by doing that, but I don’t know, it’s just the owners like Chris Ferguson, Howard Lederer, they escaped completely free. They never even got — I don’t even think a question about going to jail. There was never even as a situation where — because they had on paper removed themselves enough that they didn’t get themselves in trouble.
And now they’re like time heals all wounds kind of thing. So, they’re back playing poker and people kind of forget that what complete jerks these guys are for stealing people’s money. I think Chris Ferguson ended up winning like player of the year last year or something because he’s back out on tour playing again like no one seems to remember that, and it’s it sucks.
Dave: Yeah and it’s interesting, it’s a good reading if anybody wants to look into it, definitely Black Friday on Wikipedia. There’s some great some great YouTube videos still about Black Friday and some of the guys that Mike has mentioned and definitely well worth watching.
Mike: [Overlapping 00:54:24] was just real quick, I mean the thing that makes me sick to my stomach about still and why like I was wanting to get it out of this industry, it makes so much sense is they destroyed – they’re wealthy, like they’re going to be fine. They don’t care about the people that they screwed, like thousands of people, like thousands of thousands of jobs got lost, both people that worked at the online poker rooms themselves, and these are people that were like doing customer service or programming, like really good people. Those guys are all like really good. They gave us the management teams that screwed up people.
And then on top of it like there was lots of people that made a living playing online poker. And that might not seem like a glamorous job or something that like you’re like oh whatever, they deserve it anyway I think that some people would say, which that kind of pisses me off. And these are people that had developed a skill and like worked really hard at their craft and weren’t stealing money from people. They were playing online poker and they were grinding out, and then one day like they lost her job and had all their money tied up. All their money was online.
I mean these people kept their money so like for years like they not only did they not have a job, but like their finances were completely wrecked overnight. In that short term, that interim period when you’re like all your — like if your checking account gets ceased basically, like what the hell do you do? They were in a situation where they were living responsible, these are actually very responsible people. The people that played online poker for the most part were very, very responsible with their money because they knew how to deal with bankroll management.
And so, they couldn’t pay rent all of a sudden and they were asking me for loans like just to be able to like to put some food on the table because I knew a lot of them. And so that’s like what pisses me off when people like do this type of thing at the detriment of others and just don’t care. It’s so gross.
Dave: And I think the illusion there that you made about professional poker players, them having all their money tied up in a bankroll, and then all of a sudden that bank drying up and being seized by somebody else, that has a lot of similarities to I think a lot of the fears that people have running in e-commerce business, especially predominantly Amazon business where you have a ton of money tied up in inventory, essentially a poker equivalent of a bankroll. And I think that’s a lot of the fear that people have.
So, I guess kind of wrapping up this interview, maybe you can kind of relate some of your experiences to running an Amazon business, and what you’ve taken away — and not an Amazon business, obviously you have an e-commerce business and a fairly well diversified e-commerce business at that. But what are some of the takeaways that you have about running an e-commerce business? And that worry I guess that you have that I think all of us have that the e-commerce fountain is all of a sudden going to dry up or Amazon is going to suspend our accounts. Or if you have a Google reliant e-commerce business that all of a sudden a Google update screws your rankings, what are some of the takeaways that you’re applying now with your ecommerce business?
Mike: Yeah, I mean, it’s funny that you ask this question. So, while we were doing the RV trip, we did that for a couple of years and I kind of got bored with being retired. And I love business. I love entrepreneurship. And I would just — and I know a lot of people listening to this are probably like you jerk for you’re saying that you’re bored driving around an RV. Trust me, I really enjoyed the trip. But like eventually, I think that a true entrepreneur has a disease just like an alcoholic or something. I definitely feel that way sometimes where I thrive on this stuff. And I was sitting there thinking like what business do I want to get into moving forward?
And I was like you know what, I want something that is so under the radar, that has like zero percent chance of being in a situation where the government is going to get involved or like some situation can happen like overnight where something out of my control puts me out of business. I like being in control. And I stumbled upon e-commerce. It was indirect for those of you who know the story about how we got from a drop shipping company or affiliate company doing affiliate marketing with treadmill.com to being a drop shipper to the rest of what we’re doing.
But all that was conceived in this thought space of, I want to be doing something that I don’t have to worry about some of the things that I had experienced in the past happening again. I think that life is about learning sometimes in a hard lesson like one step at a time. And the hard lessons I learned in the online poker industry were A, don’t have all your eggs in one basket, which was Party Poker. And luckily, we didn’t have 100% of our eggs in that one basket. But it was a significant amount. And it really hurt and it was a bad day.
And B, don’t be in things that the government could have a bug up their way around about. Whether you agree with it or not, there’s a certain percentage of population that doesn’t like gambling or doesn’t like weed or doesn’t like horse racing, or whatever it might be, like drinking, whatever it is. Again, whether you agree with the politics or the underlying theory of it or not, staying away from things that could get caught up in that mix was something that I didn’t want to do. So like I mean, when I was looking at e-commerce businesses, I was like, I’m going to stay away from things or even though like weed is becoming legal and it seems very alluring, I don’t want to be mixed up in something where like one day that gets shut down.
Another thing I looked at, I was actually really serious looking at, at one point was like e-cigarettes which are still legal but can get a regulation put in really quickly. So, we landed up in this. And the thing that’s interesting is that we’re back in a couple of ways like back to where I didn’t want to be. And it’s really frustrating and scary. I mean number one I feel like we have a lot of our eggs in the Amazon basket. Amazon continues to grow quicker than the rest of our business and the rest of the industry. So naturally, you end up with more business there than anywhere else.
And it happens slowly enough that you’re not consciously making a decision to like I’m going to go do that. But one day you wake up and that’s where you’re at is kind of like what happened to our business, because we started as a purely non Amazon business. I mean most people don’t realize that. I mean we got our start in e-commerce for the first couple of years, built seven figures of revenue off Amazon. So, being back in that situation scares me. And then also now we’re in a situation where the government has gotten involved where I thought they never would with tariffs in the trade war that’s kind of looming right now, and also sales tax.
And I’m just like, how did this happen? Like, I didn’t foresee those angles coming and it definitely has me very worried because I’ve been through those things before. So, here’s a situation where we’ve built this multimillion dollar business and someone, the government gets a hair up, they were around about stuff being imported from China, all of a sudden that was like completely off the radar. I mean, a year ago, this was never even being discussed. And there’s like zero warning about it, and there isn’t any guarantee that what’s being proposed right now is even where it’s going to finish because it’s like, oh, we’re going to do a 10% tariff. And it’s like, no, we might do 25%.
And who knows where it’s going to go. And it’s really hard to have a business with that looming over your head. It really is. So, I am very frustrated that I feel like a fool in some ways because I feel like we’ve gotten ourselves back in a similar situation. And I don’t know how it’s going to play out yet. I know how it played out in online poker, but I’d rather be in a position where I feel like more outcomes are favorable to me than they are right now, because there’s definitely outcomes that could happen right now that could put us in a really bad spot.
Dave: Yeah, and I do wonder if part of it is just when you’re in a lucrative business, if you’re always going to have those couple of critical failure points that can sink or swim your business. That’s something I have pondered with even after I sold my previous business. Again, a lot of it for the fear of having Amazon flip the switch, or some other catastrophic event happened. And in retrospect, part of me wonders if there ever is such a business where you can avoid that stress of having one or two critical failure points. I don’t know if that business exists out there without those.
Mike: Yeah. I mean anywhere there’s money to be made, there’s the early pioneers that figure that out and then everyone flocks that way, and at some point that reaches a critical mass to where it’s no longer profitable. All these types of things have cyclical phenomena that happen, whatever it is. And Amazon’s definitely I think not going to be immune to that. I think that we’re still — if you look back 20 years from now, I think we’re still probably on the earlier end of that curve. But I think the reality is that people that are selling just on Amazon and don’t have any off Amazon presence are going to continue to be at a more and more risk, because of exactly what we’re talking about here.
And Amazon controls, on top of all this, you got people that are flocking from one angle of it that are profiteering trying to make money on Amazon. Amazon themselves, they are just like, well, now we’re in a situation where we don’t need you as much as you need us. Where in the early days of Amazon that was the opposite case, right? I mean, Amazon built their business on the backs of third party sellers like us to fill their warehouse and to get economies of scale and to build their business. And now that the situation is reversed, I can see some really bad things coming down the pike. And it was very similar to online poker.
And there was a time in online poker when there was a huge land grab; everyone was trying to race to be at the top. And they were paying poker affiliates like us stupid amounts of money, making horrible financial decisions to be able to get to the top of the mountain and be the one that won the race, because they knew that long term, there was all this money to be made. And once they kind of got there, they flipped the switch on us and said, well, we don’t need you anymore.
And I think Amazon could in a very scary way be getting close to that point as well. And that could manifest itself to us in terms of maybe they go from 15% referral fees to 20%, and they know that people will stick around because there’s still so many sales being made on a daily basis on Amazon, or maybe it’s storage fees go up, or they start competing more against us with Amazon basic products which are all these different other outcomes that are like out there because it’s a situation where they’ve really reached their critical mass and don’t need us as much as we need them.
Dave: Well, on that uplifting note, anything else you’d like to add before we wrap this up?
Mike: I feel like I should come up with something that isn’t a bad thing to at least end it right, because that is like a doom and gloom scenario there. I mean, and first of all, I think that it’s important for people to be thinking about those things in the back of your head. Maybe you haven’t thought about those things. So, I think it is important. But I also do think the reality is that, actually I know this. I mean this is just I read too much, and I’m a numbers guy to ignore the fact of e-commerce is continuing to grow.
So, year over year, more and more stuff is being purchased online. I don’t see any situation where that’s going to slow down. It just it isn’t really possible, like how — and it’s hard to predict and really foresee the future more than like two or three years out where technology is going to go in a relative short term. But it’s not going to go back to brick and mortar, more and more sales are going to continue to happen online through your mobile device. You’re going to end up with like drone delivery or co shared delivery like basically Uber drivers delivering Amazon goods or goods from other e-commerce stores. More and more purchases are going to continue to happen online is really the bottom line.
And we’re really at the infancy. We’re still only at like 10 or 11%, 12%, I forget the exact number now with the new statistic is of purchases happen online. So, most of is still happening offline. So, I think that e-commerce is going to continue to grow. Amazon is going to continue to grow, off Amazon business is going to continue to grow. I think there’s still a tremendous opportunity in e-commerce. I still think it’s a fun, exciting space to be in. And I also think that just like everything else, I think that Amazon could easily get themselves in the position where they’re no longer the 800 pound gorilla.
It doesn’t seem even possible or feasible at this point, but if you look back at how quickly the court of popular opinion can change, Amazon built themselves with a reputation of we care about the customer, number one, we’re the cheapest place to buy stuff, things of this nature. But they’ve had some issues lately with like fake reviews which is also now hurting the buying experience. And there’s a lot of fake goods that show up on Amazon for people that do what we do, but in a mischievous bad way. And Amazon could find themselves really quickly with like some other marketplace pops up that starts to get traction for whatever reason, because they fix some of the other problems that Amazon might be having at that time, and all of a sudden, like Amazon is no longer number one, right?
So, I think everything again is cyclical and I can see if they get too greedy or don’t fix some of the issues that things could change quickly and all of us e-commerce sellers that are out there doing the right things, the things that we talk about building good quality products, working on good customer service and packaging and not just trying to be a bottom feeder selling the same garlic presses everyone is selling from AliExpress, I think that that’s going to continue to grow and it’s exciting industry moving forward. So, I’d like to end at least on that higher note because I do think the reality is that that’s probably the way things are going.
Dave: Yeah, I think that’s a lot more encouraging. So, I think we can conclude the podcast with that. And I have to say thank you for finally coming on the podcast and telling this, what I at least in my opinion is a incredibly fascinating back-story. I think it’s a story that a lot of people can relate to in kind of their beginnings of online marketing and online business in general, maybe not at the scale that you did, but I do think a lot of people can relate to that in some way or another. So, if you guys enjoyed that podcast, if you have any other questions for Mike, feel free to head to EcomCrew.com/175 and comment on the blog post there, and Mike will be sure to get back to you guys there. And until next time, happy selling.
Dave Bryant has been importing from China for over 10 years and has started numerous product brands. He sold his multi-million dollar ecommerce business in 2016 and create another 7-figure business within 18 months. He’s also a former Amazon warehouse employee of one week.