The second week of October was a particularly busy time for me. I was up in Vegas to speak at back-to-back conferences.
This was then followed by Rhodium Weekend, a gathering of online business owners and potential buyers.
In today’s episode, I talk to Dave about my biggest takeaways from attending and speaking at these events.
- There are a lot of investors looking to invest on ecommerce businesses. With banks offering low interests, a 50 to 100% ROI that’s typical of ecommerce businesses is all the more attractive.
- Many ecommerce entrepreneurs have their significant partners involved in the business. More often than not, drawing a balance between your professional and personal relationship can prove challenging.
- No one really knows how to deal with the online sales tax issue.I joined a three-person panel session on this and about ten minutes into it, these experts were arguing amongst themselves on how this issue can be addressed.
Tune in to this episode for the details and Dave’s input on them. Overall, I was quite happy with how these speaking engagements. I was more relaxed and able to focus on how to deliver my presentation better to the audience.
We’ve opened up registration for EcomCrew Premium for 3 days. Get access to exclusive content – courses, webinars, swipe files, and conference presentations. You also get unlimited 1 on 1 email time with both Mike and Dave. Finally, we have our members-only Facebook group, which allows you to interact and learn from other ecommerce entrepreneurs. Registration closes at midnight Pacific time so go ahead and sign up today.
If you want to get involved in the Online Merchants Guild, you can get all the information here.
As always, thanks for listening to this episode! If you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes.
If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Intro: This is Mike and welcome to episode number 191 of the EcomCrew Podcast. As always, you can go to EcomCrew.com/191 to get to the show notes for this episode. And today we're going to be talking about a recap of Retail Global and the Rhodium Weekend conferences I went to speak at in Las Vegas a couple of weeks ago. As you guys know, I kind of picked up a cold while I was there and I've had just a brutal respiratory like bronchitis, sinus infection kind of thing going on.
So it's been difficult to get the podcast in during that time, so I apologize for all the Under the Hoods. But I think we're back on track now. I'm feeling about 95%. Every now and then there's this random smoker’s cough crops up on me, but besides that, doing much better. So hope you guys enjoy this episode. Dave is back with me to do a talk back and forth about the key takeaways from Rhodium Weekend and Retail Global. I also talk about my speaking performances there.
And just real quick before we get into the recap of those two events, I do want to mention that EcomCrew Premium is open again. You can go to EcomCrew.com/premium. That's going to be closing this weekend. So it's just open for a couple of days and we're going to be closing it probably through the end of the year after this time. So EcomCrew.com/premium if you're interested in that. Besides that, hope you guys enjoy this episode, and we'll talk to you on the other side of this break.
Mike: This is Mike.
Dave: This is Dave.
Mike: And welcome to this edition of the EcomCrew Podcast. How's the going Dave?
Dave: Swell, how about you? Are you getting over your cold?
Mike: It's been such a like brutal drag, man. It's just, I had the flu like six or eight weeks ago, got over that pretty quickly. And then I got this like respiratory issue which it seems like either Michelle or I get this like every year and it just takes like two to four weeks to completely go away. It's been pretty annoying.
Dave: Funny thing is after we talked last time and you were sick and this is the first time me hearing about it, the day after I got sick. So somehow you transferred your cold through a microphone over to me 2,000 miles away. So thank you.
Mike: Yeah, you're welcome. I don't know, I definitely got sick from someone else who I was staying with at a friend's house, and they had another friend that was staying at the same time and he was like coughing up along for like three days. I'm like, oh my god, I just can't get sick. I was pumping vitamin C pills like they were candy, and sure enough like on Friday night the last night in Vegas, I was like, oh god, I don't feel good, and that was that.
Dave: Well, you sound good now; your voice is as sexy as ever.
Mike: It's deeper now because like I still kind of have the hoarseness going on.
Dave: Well, there you go. Who knew you could sound even better on a podcast?
Mike: I did. But I think most people don't think their voice sounds very good. So I think that's universal.
Dave: Okay, so shall we get into today's topic.
Mike: Yeah, I just wanted to do a bit of a recap of the trip to Vegas. It was Rhodium Weekend and Retail Global, actually not in that order. But it was cool to be able to speak at two pretty large events back to back. And I guess the first thing we can talk about is just like how the speaking stuff is coming along.
Dave: Well, I would actually be curious. Can you give an overview of Rhodium Weekend and Retail Global because Retail Global, I'm familiar with just because I spoke to one of the event organizers last year in Hong Kong. But I think probably most listeners are aware of that event and what kind of the audiences. Rhodium, I am completely unfamiliar with.
Mike: Yeah, so Retail Global, we actually had Phil on the podcast, we’ll link up to that episode if you want to learn more about that. It was definitely a great event. I mean, it was one of the bigger events I've been to. It wasn't like the size of like Traffic and Conversion Summit, but it was definitely a magnitude larger than Sellers Summit or something like that. And that's good and bad. I mean it's good from there was a lot more content to consume. And I think that bad part is it makes it harder to network, right? I mean, when you have these larger groups, it's just harder to walk up to random people and say hi, than it isn't like a little bit more of a smaller setting.
So, there were definitely some great speakers, some great talks, we’ll talk about that. But the Retail Global in general is just anything to do with online or retail sales but mostly online. There was a lot of — there was four different tracks and it was just a lot of different content from every angle of selling online. And then Rhodium, to answer your question with that, I had actually never heard of Rhodium before. And the way that I found out about that was through Andrew Youderian, the guy who runs Ecommerce Fuel; we talked about quite a bit on the show, lives near the guy who runs Rhodium. They're both Montanians or whatever you would call that.
And so they made an introduction through that. And then Chris was doing this — the guy that runs Rhodium was doing this road trip last year through — he does this every year with his family. And he'll stop at several cities along the way. And he stopped in San Diego and I was able to come to a local meetup here and have dinner with them. And he'd asked me at that point to come speak at his event.
Dave: So Rhodium is basically a conference for people buying and selling a digital company. So ecommerce companies, content based companies, SaaS companies as well.
Mike: Yes. So it was interesting because I really — even going to speak at the event I didn't know a whole lot about the group which was, I kind of took it as a challenge because I had never spoken to a group of people like that. And I knew that I like Chris and I thought because he was a friend of Andrew’s, so I would do this no matter what. It turns out that they used to actually be called something different. They were called something like the internet buying and selling group or conference, or something along that. It was pretty much the description of what it was.
And so, I mean, the majority of the people there, that was like how they found the group and it was just a ton of people there that had bought businesses and sold businesses. There was stuff from private equity down to people who are looking to buy their first business. But Chris wanted to be a little bit more all encompassing and not just be about buying and selling, because obviously after you buy a business, there's other challenges that come up. So those are the types of things that were discussed there.
And it was interesting because I was talking about marketing and the trifecta, which everybody that listens to us knows that I talk about a lot. And the first thing I asked when I got to the front of the room was how many people here are running an ecommerce business? And about 60 to 70% of the people in the room raised their hand, which…
Dave: Small actually, relative to the world that we live in?
Mike: Well, we were used to speaking to 100% right. But I mean, when you're talking about — I thought it was interesting, because when you're talking about people that are buying and selling any business, they can, like you said, SaaS business or an affiliate marketing business or whatever it might be, I thought it was interesting that so many people from an investment point of view, have gravitated into ecommerce, because like I said, a large portion of the people raise their hands.
Dave: Yeah, I mean, I can speak from that from firsthand experience, the buyer of my company. He was a former CEO of a public company and basically bought my company as a way to get a decent return on his money that he had sitting in the bank account. And the thought of getting 5 to 10% in the stock market, that seems pretty boring relative to what you can get in an ecommerce company today where truth of it is, most of us, even with a mediocre ecommerce business are getting 50 to 100% returns on our money. So I can see — I've seen that kind of transition firsthand of basically rich folks wanting to put their money in ecommerce companies because they've heard all these great things about ecommerce entrepreneurs making gazillions of dollars.
Mike: Yeah, and like you said, I mean you got options of putting it in the bank or other investment vehicles. But purchasing an ecommerce company, which is typically going for 3X right now is effectively a 33% return. And that's significantly better than just about anything else you're going to do. Even if you kind of screw it up, you're probably still going to get a 25% return. And if you have the ability to improve upon existing business, you can do even better than that.
Dave: Yeah, and I think the thing is that multiples for ecommerce companies right now are fairly low. If they were 5 or 10 times multiple, then it's a whole different equation. But at three times multiple which is kind of average for most companies, yeah it's pretty hard to not do well buying an ecommerce company.
Mike: Yeah, and there was actually several brokers there including — it wasn't Joe Valley but his partner Mark, and quietly they were one of the people, one of the brokers. There were several of them there. And we actually have Joe Valley coming on what is it, the next month I guess, the private webinars that we do for EcomCrew Premium. And he'll be talking a lot about valuations and buying, and selling businesses. So I think that'll be interesting. But I was talking to Mark at length there and I was also talking to some of the other brokers, and it's interesting that valuation seems to be holding pretty steady. It's on a little bit of an upward trend, but it's holding pretty steady around 3X for ecommerce businesses.
Dave: Yeah, I would have thought after I sold my company in 2016, I thought that they were definitely on an upward trend just because of the interest. It seems that a lot of non ecommerce people are expressing in ecommerce companies. But yeah, keeping an eye kind of on it seems to be my perception too is that having gone and done anything crazy like going to four or five times, they’re somewhere around that three times multiple.
Mike: Yeah. What is interesting though, it seems like there's a higher multiple for the larger businesses. So, like there was some private equity guys there. One of them was speaking, and he was talking about how an eight figure company that's pulling in seven figures a year in net profit cash flow can actually go for between 4 and 6x. And they're looking for a lot of companies out there that are doing that.
Dave: Yeah, absolutely. And that makes sense too because at that size, you’re hopefully a little bit more diversified and the long term trajectory for the business is a little bit more secure than a low seven figure company that's basically run by one or two people.
Dave: So was there one takeaway that you took away from Rhodium kind of I guess getting into the topic of today's webinar or podcast?
Mike: Yeah, there's actually two things I wrote down that were kind of the big takeaways from this one. There was only really one big, big one for retail level, which we'll talk about in a minute. But we already kind of hit on the first one here which is this; I was surprised at what a seller's market it is. And just like how much cash is out there looking to deploy into ecommerce just in business in general. I see a lot of similarities to pre crash before like the 2006 or whatever year it was, just where there's just so much money.
The investors are looking for any way to put money to work that is better than the standard interest rate in a bank, and especially right now because interest rates are so low, I think that that is amplified even more. You have a low unemployment rate, so it goes very well to being a seller's market. There was a lot of interest there of people looking to buy businesses which I thought was a pretty interesting takeaway just first and foremost.
Dave: Yeah, and I think one thing that sometimes people ignore is that very rich and smart people also get caught up in fads. And so all these rich dudes and chicks with a bunch of money see all this money being made on Amazon FBA businesses and ecommerce and they get bought into the funnel. They want to get on board and deploy their money into an ecommerce company.
So, I think that's a big part of it. They're just getting sucked into it. They see how much money for lack of better words, me and you are, and all of our listeners are doing in ecommerce companies and they want to get involved. Even though they may not necessarily have any expertise and experience in it, they have a little sense of fomo; they want to get their feet wet in ecommerce.
Mike: Yeah, and I think that for good reason. I mean it's still in its infancy even though we're almost a decade into Amazon hanging around. I'm not sure how long exactly FBA merchants and third party merchants have been around, something like five to seven years. I don't know exactly, but something in that range that. But Amazon continues to grow at a huge clip; ecommerce continues to grow at a huge clip. And I think that we're going to look back and realize that we're still in the early days of this growth trend.
Dave: Yeah, that would be a good topic for another podcast. I think we're definitely still on the up. I think the peak is probably sometime in the next two or three years. I think we'll see a slight peeking out of ecommerce growth.
Mike: But you also told me your prediction was that the tariffs would all go away before the midterms are only like 14 days away from that now. So you might be in trouble.
Dave: My prediction three weeks ago would have been that if they make a deal, it would be very close to when the midterms actually are.
Mike: Well, that's still there.
Dave: We’re still two weeks away.
Mike: Yeah. The other big takeaway that I had there, we had a — there was like these breakout sessions and one of them was with a therapist. And we actually went to that one. It was basically the session was about either working with your spouse or just relationship with your spouse. And I was like, oh, that's an interesting one to go to. And she's actually going to be speaking at Ecommerce Fuel as well, which I found out while I was there. And I think that she's going to come on the podcast, which is pretty cool. I think it'll be a good guest. But the takeaway I had there because there was a lot of people had come to this session is just people struggle with this.
And I was surprised to see how many people were working with their spouse like I do, and that's been a huge struggle. It's tough because there isn't a line in the sand between work and personal life which makes things more challenging all through life. It was interesting just to see other people's take on that, and how they deal with that and the struggles they've had as well. So, I think the big takeaway there was that I'm not alone when it comes to this type of stuff, which definitely made me feel a little better.
Dave: Well, do you remember last year when we did our mastermind in Hong Kong? I put the question out to about 25 people. I said, who here as their first hire, hired a family member or a loved one? I think 22 of the 25 people put their hand up. So, not everybody was working with wives and girlfriends, but most people, their first hire have been either a wife or a girlfriend or an aunt in my case, or an uncle or some type of relative to start it out. It’s just as your first hire and getting things up and going as a new company, I think it's just ease hiring that family member or partnering with them.
Mike: Yeah, but I think there's a big difference between an aunt and a wife like your aunt, so that's…
Dave: I think definitely, one of the smartest moves I've ever made in my business career is not having my wife join my company. And we were at kind of a crossroads about two or three years ago, she was basically on mat leave and trying to decide whether she would go back to work or not. And I could have easily kind of brought her into my company and paid her an okay salary, and she would have had a lot more flexibility to look after our daughter Kayla. But we both I think wisely made the decision that if we do that, that's going to have serious ramifications for our family. And I think we work pretty well the other as a husband and wife. As business partners, we've seen a little micro levels, it would not be good news.
Mike: Yeah, I mean, it's definitely — I've talked about it on the podcast before. It's definitely been tough for us. And it's interesting because we've been — I mean, I've been in business since I met my wife basically. I mean, before we were married, obviously. We started the online poker thing basically together. She wasn't a part of the business but we were dating at that time and she quit her job and came to work for the company just a couple of months after I did. So I mean we've been working together since then. And it was interesting because there was never really a problem until this business.
So it was one of the things we talked about at the session and we were looking for triggers or things and ways that might be. And the things that we kind of came up with were number one, the other businesses we had other partners, which I think that probably made a difference. And number two, I think that she just has like a much more personal interest in this business because it's something she can relate to more than that online poker. So it's probably, those are the things.
Dave: Yeah. I also think that it's any relationship problems that you might be having and the stress that it brings simply because ecommerce is overall a pretty stressful business just for the amount of money that we all have to have on the table and inventory. And I think that's just one of the byproducts of it is that ecommerce overall is a lot more stressful because you have a lot of personal assets tied up and so you both are going to have strong opinions about how you should be handling those assets that you do have tied up.
Mike: Yeah. I definitely think that there's something to that because I mean I feel the stress of that all the time. And what’s probably frustrating is actually that she doesn't. I don't think that she really understands that side of the business. She's not one to really look at the bank account balance or the P&L and those types of things, that's just not things in her headspace. She's more the creative type. So it gets frustrating when I feel the stress but maybe she doesn't fully understand the ramifications of when something goes wrong.
Dave: Interesting. I thought seeing that she was a Chinese wife, she would just have innately this innate ability to understand money and how best to bring it up.
Mike: She knows how to spend less of it, so that that she definitely has.
Dave: So moving on aside, moving on from this great topic of working with your spouse, Retail Global, what were one or two takeaways that you have from there?
Mike: So the big takeaway that I got from Retail Global, I went to a session on sales tax implications and…
Dave: Another fantastic topic moving off from working with your spouse to sales tax.
Mike: Yeah, if you ever wanted — if you've ever rather have gone and gotten a root canal to listen to this podcast, this is probably the episode right. It was interesting. It was a panel of three people, and one of whom is one of the guys that we’re working with for Online Merchant Guild Paul. He’s like our lawyer for Online Merchant Guild and there was two guys. One was from like Valera I believe and I forgot the name of the other company that was being represented up there.
But the big takeaway that I got from this was that no one knows how to deal with this. It was so intriguing because there was like 75 people in the room. And the three panelists probably were arguing more than anything. The entire conversation basically, after the first 10 minutes of kind of preps, pre comments turned into them arguing amongst themselves to try to answer questions from the audience on how to deal with certain aspects of this and what the repercussions might be.
And it wasn't surprising to me. But it just kind of reinforced the situation we’re in of no one really knows how this is going to shake out yet. And no one really knows the best way to deal with compliance because unless you're the size of Wayfair, which is what the case was about originally, you just have no hope of having a team big enough to be able to deal with all the ramifications of this at this point.
Dave: Yeah, I mean, every time I log into various groups, whether it's the EcomCrew Premium, or Facebook group or a couple of the group's I'm part of and hear horror stories like the one about the premium member who's getting billed from all these different counties in Arizona for a business license, because at one time he sold the product into there. And I hear stories about this, it just makes me realize how screwed up it is. And again, this is no breaking news. But I don't know how the US is ever going to find a way out of this because it is such a monster of a problem they have down to the state level and the county level that unfortunately I think it's a problem bigger than ecommerce.
Mike: Without a doubt. And there's been some talks of like a national bill to deal with this, which I just don't have any faith in Congress being able to get anything through that makes sense at this point. I guess I'm a little jaded and pessimistic at this point. But yeah, I mean the thing that's interesting is that the software providers’ angle was like, it's so easy to file for sales tax. And I brought up a question about the thing; I was like, I agree, the sales tax part is easy. If you're just collecting and remitting the sales tax, that part actually is not that difficult. I mean there is software obviously out there that deals with that. It's all the other repercussions and ramifications that is the issue. And it's the cost of compliance far exceeds the profit until you’re a certain size of business.
So you end up in a situation where you lose money just by selling into a state because the cost of dealing with the compliance and the licensing far exceeds what you can make. And there's rules about this. The constitution has rules about, that's one of the reasons we started Online Merchant Guild. So you can go to onlinemerchantsguild.org, we've done several podcasts about this. I'm not going to get too much into that. But we're on the crux of — the organization is on the crux of suing a few states, and try to push this to get some positive outcomes for all of us sellers.
But as of right now, I mean it's definitely pretty scary. I mean the example that you just mentioned from Arizona is nuts. And it wasn't just that they had their hand out for whatever how many counties that are, let's say 40, 50, I don't know how many counties there are in Arizona compared to other counties. But if every one of them is $100 fee to file for and then they were also looking for back penalties and stuff for not having done it sooner, it was like a five to $10,000 bill just to just to open up shop in Arizona.
And that's from your first dollar sold. So if you're a $500,000 ecommerce brand making $50,000 a year, I mean you can see how you can quickly spend way more money in compliance than you would ever make in your business, and it's definitely not a good situation.
Dave: Yeah. The interesting thing of the sales tax thing is it's actually something I've been thinking about. It's actually going to play out in Amazon's hands advantageously I think because as more and more states buy into basically Amazon collecting tax and remitting it on behalf of third party sellers, and I know sometimes it also means that you still have to file a nil tax return even if Amazon is collecting your tax. That aside though, if Amazon is collecting all the sales tax for sellers, what it is going to do is make me as an individual seller think, well, I should just do all my sales through Amazon because they're collecting and remitting it.
And that way I don't have to worry about importing my Shopify sales separately and my eBay sale separately, I'll just stick strictly on Amazon because they're going to do all the sales tax collection for me. So I think it actually plays out on Amazon’s hands quite nicely, the more and more of the states get on board and just have Amazon do all the collection and remittance for them, for third party sellers.
Mike: Yeah, and this is where like the rich get richer and that's where that saying comes from where I mean Amazon I think will continue to expand just because of the weight of their footprints. And this is another good example of that. And it's not just that, but like having Whole Foods now and they're probably going to have their own shipping network. And they just continue to expand their reach to the point where at some point I have to imagine, like an antitrust lawsuit or something, I don't know. But until then they're going to just continue to assimilate like the Borg.
Dave: All right, you stuck your Star Trek reference.
Mike: I did.
Dave: So were there any other takeaways besides the sales tax with Retail Global?
Mike: That was definitely the biggest thing for me there. And I only went to that conference one day, so I didn't have the opportunity to see everything, all the different talks. But the day that I went that was the big thing. And then I spent a lot of the rest of the time of that day talking to other speakers or the people I wanted to try to get in the podcasts and stuff like that, and saw a lot of the same people that kind of speak on the circuit that I hadn't seen in a while. So it was good to catch up with them, some people that have been on the podcast and stuff in the past.
Another, I guess another big takeaway just of the entire week was just how far I've come speaking. I mean, I've talked at length about this on the podcast of how the first time I did this I literally got zero asleep and had to go to Toastmasters. I mean it was — you don't get as stressed about this as I do so it's hard to probably understand. But it was, I slept fine the night before. I wasn't even really thinking about or anxious about speaking until a couple of minutes before getting on stage, and I was able to focus more on trying to do a better job speaking and not talking as fast and all the only things that people have told me that were issues before, and it seemed to go well.
I mean both the event organizers went out of their way to tell me that it was a good talk and that people enjoyed it etc. So I guess the ultimate way to know how good it was is if I get invited back next year. But it was definitely a pretty positive experience and I felt pretty good about myself after doing it. And it's something that I've been working on and I'm usually pretty critical of myself, but I have to probably for the one time to pat myself on the back a little.
Dave: I'll have to check out the video replays. Are they going to provide them to you?
Mike: As far as I know, they were both definitely recorded. They were both recorded, and usually as a speaker you can get the videos. So I'll wait a few weeks and ask for those once they're done.
Mike: All right. So, once we get them we’ll post them live to EcomCrew.com, and we’ll solicit everybody's feedback and criticism of Mike’s speaking style.
Mike: And I had the beard walk rocking when I was there too, so you can rate the beard.
Dave: But no horsey sick voice to go with it.
Mike: No, I didn't get sick until the night of Rhodium when I spoke at Rhodium. And I think that was just a combination of being around the guy that was sick the entire week. And it was a long day and just Vegas is kind of a harsh environment anyway when it comes to just any type of respiratory thing. It's so dry there, when I lived there I always had a hard time. I had to have a humidifier in my room because like it just your sinuses, your chest, everything is just like so dry all the time, and that probably didn't help.
And then I had to be there at 8am for a sound check, I didn't get back to till 11pm after being there all day. And there was a speaker's dinner which was awesome. I always love when organizers put those types of things together where you get to meet all the other amazing people that are there speaking at the event. But yeah, I got sick. I guess timing wise it was good. At least I wasn't sick on stage.
Dave: Yeah well, I'm looking forward to hearing the talks. I actually know nothing really about what you spoke about, so it'll be interesting for me as well.
Mike: Cool excellent. Well, I think that's a wrap on this episode.
Dave: All right. That sounds good so yeah. Any closing thoughts or is that kind of a wrap or do you want to add things with another Star Trek reference?
Mike: I'm not really a huge Star Trek fun. I just I didn't watch — my parents were and my grandfather. And I do remember watching some of those at that time. There's some good episodes, but definitely not a Trekkie.
Dave: All right.
Mike: Sorry to disappoint you Dave.
Dave: Don't worry; I'll fill in the gaps with Star Trek references next time.
Mike: I'll sign off for this episode saying live long and prosper.
Dave: All right guys, happy selling.
Mike: And that's a wrap folks. I hope you guys enjoyed the 191st installment of the EcomCrew Podcast. I had some interesting things to talk about from Retail Global and from Rhodium Weekend. As you can probably tell, the sales tax things are quite top of my mind and still kind of a debacle. People don't really know what to do about it. And so I guess you're not alone in that regard. But if you want to help fight that cause, you can go to onlinemerchantsguild.org and sign up to help support us there today.
And besides that, I want to thank you guys for supporting the EcomCrew Podcast. Your support means the world to us. And until the next episode, happy selling and we'll talk to you soon.