Happy Friday!
I just got back from Main Street Summit and my head is absolutely jam-packed with ideas, so let's get after this email right this very dang second. I want to talk about finding magic with unique marketing ideas that will print cash faster than the US Government.
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I frequently tell my kids "Test everything, except drugs," and I love this advice. Why? Because imagine all of the things we could either...
...that we currently have no idea about! For example:
In 2019 I started running. And to be clear, I'm not a runner, nor do I have a runner's body. I'm pretty big boned at 6'3" and 205 lbs. I started running to avoid becoming fat again, plain and simple. The only organized sport I ever played in high school was wrestling. I was decent at it, going 39-9 my senior year and qualifying for states, but I never placed and wasn't anywhere near elite.
As a 205 pound runner, physics isn't in my favor. Ounces = pounds and pounds = pain, and I have a lot of ounces, 3,280 to be exact.
But I soon learned that the longer I ran, the better I got compared to my peers. I'd never win a 5k, and maybe not even a marathon, but an ultramarathon win was within reach. Over the course of 2.5 years I ran 15 ultras, winning 5 of them and setting course records on about as many. I later learned that I have an endurance gene. My grandpa once walked from Ft. Worth to Dallas, just because. That sounds like me!
What's cool about ultras is that it's almost all mental. If you can be dumb enough to ignore the pain, you can win.
Did you know that ultramarathon running is one of the only sports where the women routinely beat the men? Why? Because women are freaking tough!
Anyway, my meds must have not kicked in yet because I'm getting off track. This email isn't about running, it's about testing and marketing.
My point is that had I never started running, I would have died never knowing that I had it in me to set running records, as a 205 pound, formerly obese, dad-bod-dad.
I tested that, so now I test everything.
But let's (literally) get back to business.
At the conference this week, I heard from a guy named John Fiorentino, also known as John Fio on Twitter.
John is known for inventing the Gravity Blanket, AKA the first weighted blanket. He's also gone on to create hit after hit.
I'll be honest, John's talk at Main St rubbed a lot of people the wrong way. Why? Well, how do I put this? A lot of what he said was word salad. He waxed very poetic on finding "magic" in a startup, and what they process feels like, or should feel like. He used a lot of big words without really saying anything, and a lot of us found ourselves scratching our heads, myself included.
But by the time he was done I was completely enthralled with this guy. It was as if I learned his language as he was speaking. He was my spirit animal and I found myself agreeing with almost everything he said. The main premise of his talk was this:
If you're starting a startup and things are going ok, but you aren't absolutely swamped with demand, then you need to quit and try something different. Allow me to put my own twist on that that I find more palatable.
He referenced Peloton, and said that when everyone first heard about a $3k stationary bike they thought it was stupid. But because of Covid, Peloton looked genius for a couple years. But now, in looking at their dismal stock performance, it's fairly well known that he was right and that our initial gut intuition is always correct.
I took issue with this absolutism. How many people thought that digital internet money would work? Or that watching others play video games (Twitch) would work? Or pet rocks? Oftentimes our initial gut "this is stupid" reactions are an indicator of a big innovation or tidal wave coming.
My main beef was this he didn't leave room for nuance or exceptions.
This advice flies in the face of conventional wisdom. Startups are hard. They're a grind. And a lot of the world's most successful companies weren't obvious home runs in the beginning. In fact, most of them weren't. It takes time to find traction and to find the right marketing channel.
Occasionally you find the Ubers or the Facebooks of the world that are rocket ships from day 1. The product market fit is there and it's obvious to everyone. You have magic, as John called it.
I've both experienced and written about this myself in Newsletter #0002 when I talk about product-market fit (PMF) being similar to being chased by a stone rolling down a mountain. It's an amazing and terrifying feeling.
But this email isn't about PMF or finding the next Uber, it's about finding the right marketing channel for your product or service. It's about finding magical lightning in a bottle, and it's much more possible than you think.
In my iPhone parts example, that magic was boring old cold calls to iPhone repair stores. It wasn't unique or innovative, but it was perfect for that channel at that time.
A few years later it likely wouldn't have worked as well.
My Tweet today was about a midwestern house flipper that found magic in Judge Judy ads.
Even if you're running a company that feels like pushing a boulder uphill, it's still possible to find that magic that will cause the boulder to chase you. Pushing a boulder doesn't mean you have a bad idea or a bad company, it means you don't have the right channel...yet!
Ok, so HOW!? How can I find this magic, Chris!? Well, I'll tell you exactly. You need to start testing.
If there are only 100 marketing channels that exist and 1,000 business ideas, products or services to sell, that means there are 100,000 different tests that can be run.
This will be an entire newsletter edition of it's own one day, but here is an example of this.
On 10/1/21 I purchased a Bitcoin mining facility. It wasn't a company, but rather I purchased the lease to an industrial space in Rockwall, TX that had 300 Bitcoin miners that were profitably mining about $17,000 worth of Bitcoin per month, after expenses.
I put only $50k down for this company and generated over $9,800,000 of revenue in it's first 90 days, with about 12% of that being net profit into my personal checking account. It took 3 employees plus myself and had a positive cash flow conversion cycle, so we didn't need to borrow any money.
How?
It was the perfect storm convergence of:
We bought this facility to host and sell miners. If you don't know, a Bitcoin miner is a purpose built machine that costs $5,000 - $15,000, weighs 32 pounds and looks like this:
If Bitcoin were to disappear tomorrow, this $10k machine would become a mere paperweight. And no, you can't use it as a graphics card.
But it is also a legal, digital money printer.
You know how people say, "That guy basically has a license to print money?"
Well, I literally did.
But believe it or not, it's kinda hard to sell money printers. Why? Because most people think they're a scam. And if they don't, you have a ton of competition. We sure did in 2021.
So I started testing everything to sell these dang machines:
You get the idea. All of them worked just okay. We were pushing a boulder, but seeing enough movement to keep going.
But then one day I decided to test something. Instead of advertising a $10k miner, why don't I advertise the $200/month hosting fee instead? After a customer purchased a miner, they needed a data center to host it, and we offered that, too.
So I listed the miners for sale on eBay and FB Marketplace with a $200 price point, with the description clearly showing that $200 was the monthly hosting fee, and that the miner prices varied, but to book a call with us to learn more.
Magic. The calls had an 82% close rate.
That simple tweak led to all those sales in a short period of time. That company, Mining Syndicate is over 2 years old now and one of the biggest in my portfolio.
Do those tricks still work? Nope, not at all. The window closed and we have to find other channels now.
That's the thing about magic. Eventually the kids watch a couple YouTube videos and figure out how the tricks work, and you have to keep reinventing.
But if you aren't testing many, many things, you likely won't ever find the right channel.
Here's the framework to finding that magical channel in two steps:
You're looking for max surface area. Once you find that magic, the clock is usually ticking. The more effective a magical exploit, the less of a lifespan it has. I wouldn't be telling the world about my FB Marketplace + BTC Miner exploit if it still worked.
Conclusion
I hope this motivates you to start testing, testing, and testing. Test a sport, a business idea or a marketing channel. Test what happens when you do the dishes before your wife asks. Test what happens when you tell your boss you're quitting if you don't get a 20% raise. Just don't test drugs.
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What am I spending my time on nowadays?
Well, I spent all day Wednesday and Thursday at the conference, which was awesome. I've had to lay off a couple employees at Mining Syndicate so we can continue weathering this bear market, so that hasn't been awesome. It's hard to sell money printers when they're more likely to lose money than make it.
We're about to add 2 more territories in DFW for the tree biz so we can scale a little closer to home, so we're super excited about that. We've got the operators and the leads, we just need more crews.
I'm helping the owner of a $9m landscaping company sell his company, and that has been a lot of fun.
If you can't tell, I just love business. I'm so grateful it's both my job and my passion. The industry is completely irrelevant to me.
Tonight I'm going on a daddy daughter campout with some friends from church, and next week I'm camping with some other friends from church as well.
Next weekend we're driving to Tuscaloosa, AL as a family to see back to back 'Bama basketball and football games.
I hope everyone has a great November. We'll see you next week. Please forward this to anyone that might like it.
Chris