How Legacybox Turned Old VHS Tapes Into $20 Million a Year

Transcript

Felix:Today, I’m joined by Nick from Legacy Box. Legacy Box helps people organize, preserve, and enjoy the most important recorded moments by digitizing aging analog tapes, films, and pictures. It was started in 2009 and based out of Chattanooga, Tennessee. Welcome, Nick.

Nick:Thank you. I appreciate you having me on the show today.

Felix:Yeah, so, I see here 200 employees, 50,000 square feet of space, and you guys are doing thousands of videos per day. Before all this happened, how did you guys start? Were you guys doing it yourself? What’s the origin story?

Nick:We had that typical garage story. We started in college. My roommate and I were actually suitemates in college. He was doing some video work, and I was doing some web and online design work. I started asking questions. He was moving in all these sort of nerdy video things into his room. I was like, “What are you doing?” He explained to me some of the stuff he was doing to a video and then how maybe on the side, he made some money converting things for people. His website was terrible, and so he asked for my help on that, and then we were kind of off to the races. We learned that a lot of people had some of this stuff sitting in their closets and attics just sort of eroding and wasting away all these old analog recordings that needed to be preserved, so that was the beginning of it, just in college as roommates.

Felix:Got it. Who are these customers? Describe your typical customer that would use a service like yours.

Nick:是的。我的意思是,他们都是家庭,所以这是一个现成的ty broad market. It’s basically anybody that’s recorded their old family moments. I mean, it’s across all income spectrums, all demographics. It’s all kinds of most important life moments that you can imagine, so people’s birthdays, and Christmases, and important memories. Yeah, it runs a gamut, but I mean, obviously, it leans toward married people who have kids and have a reason to record these things in the first place.

Felix:Right. Now, when you guys first got started, where did you find these customers? Where were you finding people that wanted this kind of stuff done?

Nick:是的。Adam, early on, he got an early invite to Google AdWords. It was as they were launching. He was still in high school, and so he thought … They gave him, like, a $50 credit. He thought, hmm, I’ll try this. I think he had created his website in Microsoft FrontPage, so it was amazing.

Felix:That’s cool.

Nick:It had scrolling marquees. It had little flame GIFs or whatever.

Felix:Nice.

Nick:Anyway, he tossed that $50 credit at Google and started to get calls on his cell phone in high school. That’s how he first discovered that you could market, essentially, directly to consumers online.

Felix:And you’re saying that you guys were marketing directly to consumers. Is that because your competitors were not doing that? What was out there already?

Nick:We didn’t have the wherewithal to understand that’s what we were doing. I think we were just two kind of nerdy guys that enjoyed being able to work behind our computers and find customers that way. Then we sort of realized the power of it as we started to get a lot of customers and orders came rolling in. Then we sort of became aware of the marketplace. There was one big competitor to us that has distribution through all these retailers. So if you go to Costco or something and go to the photo counter, you would drop it off and they’d be the processing company behind that there. We realized there were other competitors, after the fact, that were doing this and had distribution in other ways. I think what drew it to us was just because we were computer nerdy guys that were like, wow, look, we can pull these levers and stuff happens, but then we realized it was actually a pretty good business model to go direct to the consumer online that way, and it gave us a broad reach for what is traditionally a pretty, you know, a niche business.

Felix:对的,你提到一件事具有吸引力led to you was that you guys were able to work behind computers, and then just find customers and build a business that way. You mentioned the word nerdy.

Nick:Right.

Felix:It sounds like a business that was really appealing to people that were maybe introverts or they’re not trying to get out there and going door to door and doing all these sales or anything. With your success that you’ve had so far, it was almost 10 years, almost a decade in business now, can you do this indefinitely, or is there a certain point where you just gotta get out from behind the computer? What’s been your journey?

Nick:是的。我认为,亚当和我…我的意思是,我想if we took personality tests, it would show that we’re introverted. I think both of us have had to learn as the business has grown, we have had to get outside of the computer. I mean, we’ve developed business relationships, and vendor relationships, and even talking to customers. I mean, that was sort of the first piece of that where literally now the phone starts ringing. I remember the first calls were forwarded from the 800 number to my cell phone. Literally, we’d have to pause our Call of Duty games in our off-campus hours. We’d be like, “All right, all right, everybody be quiet. There’s somebody calling.” We’d pick up and go, “Thank you for calling Legacy Box. How may I help you?” And so, you had to get out from under the computer in a pretty short while and actually talk to people.

这就是我们学到了很多。我知道这是一种cool for a lot of companies not to have a telephone number out there, and that’s great if you can make it work and you don’t have to actually have telephone support, awesome. But, I think the flip side of that is, that’s where we learned a lot. We would literally talk to customers, and then we’d fold those learnings directly back into the site. I mean, they didn’t know they were talking to the two founders, but we would just get off of the phone call and go, “Okay, this is confusing. Change this. Modify that on the website. This language doesn’t make sense here. People want this or this.” And so, talking to customers was a fantastic way to get realtime feedback on what people wanted and hung our business model. Anyway, we had to learn how to get out from behind the computer pretty quickly.

Felix:So, when you’re not talking to customers over the phone, the other thing that a lot of people do is look at analytics, or read emails from customers, or read comments and reviews. What can you learn by getting on the phone and talking to a customer that you cannot learn from those more kind of online maybe more impersonal ways?

Nick:That’s a great question. I think it’s both. I mean, we live and breathe data over here, and that’s a great way of giving perspective. I think sometimes if you’re talking to people on the phone, it might make some sort of fringe thing seem like it has greater implications than it does. So, I mean, the data can figure that out if you’re actually looking at things on a macro level with data, but on the flip side of things, I think the data is always lagging a little bit. If you’re looking at that on a monthly basis, or weekly basis, or whatever, you might be a little too late. I think in the early days, especially in the real startup garage days, it enabled us to get feedback right away, and then fold it back in.

我ean, if you think about it, we didn’t have a lot of traffic in the early days. If I talked to 20 customers in a day, that was probably a lot, so the sample size is really small. If I sat there and waited for some statistical relevance on data when we’re in the real early stages of things, I’d be waiting for a long time. But if I could talk to just 20 people, I’d have a pretty good sense of where our needs are. Even today, that holds true. I mean, we look at reports and they’re all pretty sophisticated. We had all the cool analytic stuff, and dashboards, and things, but literally, if I just go talk to customers for a couple hours, I’ll have a pretty good sense of where our blind spots are.

Felix:Right. So when you don’t have a lot of traffic when you’re just getting started, that kind of qualitative feedback is even more important because that’s maybe all you have, and the best way to get it from them is just to talk to them on the phone, get them on the phone and ask them these questions.

Nick:是的。

Felix:Speaking of that, what were you asking about? It sounds like you were getting great feedback, things that you could actually fold back into the business, back into the design of the website, maybe things that weren’t clear or frictioned in the purchase process. What were you asking them to get all the great feedback?

Nick:We didn’t have to ask. They just volunteer it. I mean, that’s the great thing about a customer. When you’re trying to convince someone to spend their hard-earned money on something, that’s a tall order in and of itself, and they’re gonna tell you in pretty blunt terms what their hesitations are. And so, we just had to listen more than ask, and so a good example of that is really funny. In the early days, we had on our website, we had this button for our service to make … Everybody wanted DVDs. That seems like ancient history now, but when we first launched, everybody was getting their things digitized to DVDs, and so we thought, well, people will want duplicates of their DVDs, which is technically … The technical name for it is a DVD duplicator, and so we had on this website, you can get duplicates, and here’s the pricing for duplicates.

We were like, “No one ever buys these.” I’m like, “This just doesn’t make sense. I would think they would want them for family, and friends, and other people, so that’s really weird.” I just remember us talking to a customer. They’re like, “Yeah, so how would I order extra copies?” I was like, oh, yeah, no one calls them duplicates. They all call them extra copies, and so it was hilarious. We switched the button text on the site immediately. We were like, okay, that’s really dumb. DVD duplicates makes no sense. Change it to extra copies. Overnight, we quadrupled the number of extra copies we sold, just because the language was not speaking the language that our customers would. So, just listening is actually the most important thing, I would say, when talking to a customer.

Felix:Yeah, yeah. I think this is important because you’re saying that even though the terminology they were using wasn’t technically right, it’s better to try to avoid trying to educate them or squeeze them into or force them to talk a certain way. Instead, you should be adapting as a store owner, as an entrepreneur. You should be adapting the language you’re using to fit how they’re already talking about your solution or their problems.

Nick:Yeah, no, absolutely, yeah. The other piece of background is we had always been bootstrapped. Even to this day, we’ve never taken external funding, and so we had no ego about it. I mean, we wanted to do whatever we could to get the sale. If that meant … To your point, we were not gonna sit here and expend energy trying to get customers to somehow comport to the way of thinking or the language that we would use. We were just going to go, “Okay, I’ll meet you where you’re at.”

Felix:Right.

Nick:That’s totally fine and I have no hesitations about that. So, yeah, I think that’s a good learning. Meet customers where they’re at, not waste undue energy trying to get them to think or use the words, or language, or perspectives that you might have.

Felix:Right. These ads that you guys were running on AdWords, they were going straight to a phone call. What were people calling and talking to you guys about? Were you able to close them right away, or what was the conversation like?

Nick:我ean, our industry, obviously we’re digitizing people’s old little movies, and pictures, and films, so they always just wanted to talk about it. They wanted to ask a few questions. A lot of times, they’d want to know what the process was, or is it safe to do this? Yeah, I mean, I think the funny thing that we learned is if we’d actually speak to somebody, if we had prompt service, and this goes if you have good chat service, or good email tickets, or even good phone calls. If we would be hyper-responsive, I’m talking we picked up right away, not even that we called back in five minutes, we would close the majority of those sales. If we were even slightly outside of that window, I mean if you think about it, people are busy. They’ve moved on. They might’ve been interested in that five minutes, but then the kid screamed and they had to walk away from their computer, and maybe it’s just not top of mind anymore, and so we didn’t want to take that for granted. So yeah, I mean, we would close a good portion of the sales if we talked to people, which is why we had the incentive to keep doing it.

Felix:Right, so you were doing a bunch of these calls, picking up a bunch of these calls. How predictable are people in terms of their questions or objections when they get on the phone with you?

Nick:我ean, we learned extremely. We also learned that if we changed the language, if we changed the way that we’re communicating with them on the front end, that we could predictably change their responses, too. We always looked for opportunities to avoid friction, not answer friction. If they had some sort of hesitation or issue that they were bringing to light, we always took it as if somebody called or sent us an email about something that they were hesitant about, imagine all the people that had the same hesitation, but never reached out. It’s probably a good portion of people, and so it ends up being very predictable. I mean, that’s kind of the cool thing about it. That’s why statistics, and analytics, and eCommerce is so intriguing, is that you can create a formula for success. So yeah, it’s pretty predictable. I mean, it got to the point where me and my business partner could answer phone calls, and talk to people, and be multitasking 20 other things because we knew exactly what they’d ask and that we had literally practiced the responses so many times that we knew exactly what to say.

Felix:Use that to [inaudible] and then you know exactly what to ask and respond with-

Nick:Right.

Felix:That’s great.

Nick:是的。

Felix:Are you guys still doing that today? Are you guys still, either you or the company, taking phone calls from ads today, or when did that change if it changed?

Nick:We are.

Felix:You are.

Nick:Yeah, no. We have over a dozen people on our customer support team seven days a week 8:00 to 8:00 PM answering support tickets, chat, or phone calls. It’s an important thing for us, especially if you think about the trust people have to have when they’re shipping off their one of a kind life moments to us. We’ve always just felt that it’s an incredibly important piece to have a person on the other end of the line that they can actually speak to. I know if you have a more simplistic business model, you may not need to have that, but for us, it’s important. So yeah, that’s still a critical piece.

Felix:Got it. When you’re building out this customer service team, how were you able to train the entire team up on the things that you guys learned about what kind of questions they’re gonna be asking, what kind of responses to expect? How were you able just to create that kind of training program?

Nick:It’s hard. I think we continue to try to get better and better at that, but I mean, we have little training modules on different types of topics that we go through. Zendesk is what we use. I mean, most of them have these pre-written responses that are really good and service templates. Those can be bad if you’re just sending template in responses, but you’re not really thinking about it. Those can be bad, but it allows us to sort of standardize some of the ways that we’re speaking. Help sitter is really important, and we actually have people learn about the commonly asked questions and the responses through just a really nice up-to-date help center. That’s part of the way that we train, and then I know we have different leads there that have been there longer and have been trained longer to help serve as resources to maybe the newer folks that don’t have answers to certain questions.

Felix:Is it still an ad today that gives them a phone number to call, or are they calling from seeing the phone number on the website?

Nick:他们都来自看到的电话号码的电话website. Even in the early days, they did. Google Ads would always drive people to the site, and then our phone number was always on the top of the website. I think today, the phone number might be on the bottom of the website now, but it’s still on every page. We’re always driving to the internet. We’re always driving to our website, but then we do have telephone support available for people.

Felix:Got it, and so you mentioned earlier that you guys bootstrapped the entire thing. When it did come time to start investing into the business, what are some of the early investments that maybe made you guys nervous, like, oh, this could end us if it doesn’t work out?

Nick:是的。我的意思是,是关于引导t you have to sort of pull your resources, right? You’re pulling the profit of the company, and then you gotta place your bets very strategically. I mean, you might only have two, three bets that year. We gotta make this work. I remember us getting sort of seduced in the early days. You’re in the garage, but it was literally Rolling Stone Magazine. Someone called us. They’re like, “This is Rolling Stone Magazine.” We thought, oh my gosh. It’s Rolling Stone. How cool is that? They said how they wanted to feature the product, and this is what it would cost to be in this gift guide, and here’s the millions of people that’ll see it. Here’s my advice. If your rationale for placing bets is ever what ours was, don’t do it, ’cause we looked at it. We said, “If we get 1% of 1% of people to buy, we’ll be rich.” If you ever make the 1% of 1% argument, just walk away. It’s a bad deal, but anyway, we literally … I remember, I think we had $10,000 in our business savings account, and I think it was like $8,000 for the ad. That’s how small the numbers were in those days, so we’re like, all right. Here’s our savings account. We’re trying this ad. I think I can only attribute one sale to the whole thing.

Felix:Wow.

Nick:It was a big failure, but it honed our ability to, well, one, not to be taken in with sort of glitzy and glamoury … I think it was like an ego thing that we were sort of anonymous in a garage, and we had these people reach out to us and thought, ooh, this is cool. So, it’s sort of a good cautionary tale for that, but then also just making sure you start small and you validate things, just the way that we’ve built every … Every other marketing channel that we’ve built has been by starting small and validating it step by step and building it up to something significant. That’s been the key.

Felix:If you can think back, then, to that moment where they reached out to you, what questions do you wish you had asked, either internally or them to determine if this would’ve been a good fit? Obviously, it wasn’t a good fit, but what kind of questions would you have asked to recognize that this might not be a good fit?

Nick:是的。我认为,我看着…nd we wouldn’t have known this at the time, so I would’ve looked at examples. I would’ve wanted examples of other companies that have been successful there. Then, look, are they eCommerce companies? Are they people kind of like us or not? And so, that would’ve been a good indicator. Had I seen other potential direct to consumer eCommerce companies there, maybe that would’ve been a good indicator, or maybe I could’ve even reached out to them and said, “Hey, how effective was this? You did this thing. Your ad was in here,” especially, I mean, most of these guys are … When you’re looking at direct to consumer eCommerce brands online, they’re not a competitor. People absolutely share learnings. I think that would’ve been something I would’ve wanted to do, was ask, “Hey, who else is in here? Show me an example.” Then maybe I would’ve vetted it through those people. The other thing is if I thought ahead any sort of validity, I would’ve tried to cut the price by a quarter and said, “Okay, great. How can we start with just, like, two grand because we want to be able to try it with a minimal amount of budget as possible to see if there’s any life there first?”

Felix:Right. Anything is negotiable.

Nick:Yeah, that’s the other piece. I mean, we were too young and kind of dopey to realize that, but everything is negotiable.

Felix:Right. Everyone wants to be first in a marketing channel, or they think that they want to be first, but it sounds like after learning those lessons early on, you liked more proven methods today, or at least methods that you can validate. How do you begin to validate whether … How do you begin a test these days to validate if you guys should invest more into it in new marketing channel?

Nick:We just place small bets. There’s a great … I love this book. It’s like Let My People Go Surfing by Yvon Chouinard or whatever from Patagonia. He’s in there. He’s like, “Yeah, we fail a lot. We just make sure that they’re small failures.” As a bootstrap company, I mean, we sort of had to adopt that mindset. We’re like, okay, well, we’re not gonna ever test with the majority of our savings again. Let’s just test with a small portion, and so that’s all we ever did. We’re like, okay, we just won’t even touch it. If the barrier to entry is so big that it would represent a large risk for us, let’s try something less risky, but yeah. We would just test small. I think what we’re looking for is there has to be some signs of life. If you test small and there’s no signs of life, it’s not gonna get better. There’s like VC-funded companies that we’ve worked with now with millions in budget. It’s funny ’cause they don’t get that. They think, oh, no, no. If you keep … And Facebook will tell you that, like, oh, keep spending, keep spending, and then it’ll ramp.

Felix:So the idea is you make it up on the volume, even though it’s negative.

Nick:Yeah, you’re not gonna make it up on volume. That’s silly. There’s just minimum threshold or sales quote as people are trying to get to, and so we look for … And I’m not saying you have a winning model, like maybe if you place that $100 bet or $1,000 bet, I’m not saying it’s gonna be winning right out the gate, but you see enough positive indicators that it makes you want to place the next bet. I guess that’s what I’d say.

Felix:And when you look at a new marketing channel, is there a certain budget that makes sense before you can say that this is enough of an investment that we can run a true test? You have $10 or whatever, it’s probably gonna be harder, right, to tell …

Nick:Right.

Felix:If it’s a good marketing channel or not. What is a recommendation that you would give out?

Nick:Yeah, it just depends on the channel, I think. I think AdWords, for example, when you’re playing for clicks, I mean, you don’t need a large budget. When you’re paying for clicks, if you spend $100 and you don’t at least see one click, there might be a problem there. I think pay-per-click channels have a lot lower budgets than people would consider on testing, at least in what we find, but then it just depends on the channel. There might be other things that are a little bit more cost-prohibitive. In that case, then we usually try to just … That’s where we would look at other best practices to try to understand, is that legitimate? Do they really need that much budget in order to test it or not? Why do … That’s the question you should ask. If somebody comes back and says, “No, no, no. If we’re gonna do direct mail right, we gotta at least spend $30,000, and that’s how we’re gonna test it out,” I would want to know why. Why do you say that? Why $30,000? If there’s not good rationale, I would have a red flag.

Felix:So you guys like to start small with the marketing channels, and you want to get the fundamentals right before you …

Nick:Right.

Felix:And then kind of then grow from there. What are these fundamentals to you? What are some key things that you want to get right with each marketing channel?

Nick:我ean, I think I would just look at things like the response rates. I mean, how many people are actually responding to these ads? What are the click through rates on the ads? How many leads does that drive? What are the costs for those leads? And then if you can do that, are those leads any good? Are they garbage leads, or are they actually qualified leads? And so, you try to figure out how you can sell to those leads and test the quality of those leads from there. So I mean, I think that’s what you’re looking at. Every business is different. I talk to people who are there like, yeah, look, we can pay this much to acquire a lead, and other people who say, “No, no. We can only do this much to acquire a lead.” I think that’s what you have to start understanding in your business and that’s why I think ad platforms like Google are great to start because they’re low budget and you can start to get a handle on what those metrics are for you. That’s what we’re looking at. We know roughly what we would actually be able to pay for a lead. We know roughly how well an ad should perform if it’s gonna be healthy, but that’s based on our own historic averages, just by doing it for 10 years.

Felix:So you’re looking for a winning formula, is what you mentioned. What’s a formula? What do you mean by that?

Nick:我的意思是一个销售基金。我的意思是,如果有人在再保险ally … Business school, but if I’m putting money into the machine, how many potential new customers are seeing my message? How many new customers show some interest? How many new customers respond to my ads? How many new customers then buy, ultimately? And then maybe from there, how many customers buy again? I mean, just the sales funnel, I think that’s what you’re trying to line up where essentially, if I’m putting in a dollar into the machine, I’m getting $3 out. That’s sort of the [crosstalk].

Felix:Right. Were there certain formulas that worked out early on that just didn’t scale well once you guys got larger?

Nick:是的。我认为所有通道的天花板。我ean, AdWords is a great example of that. I mean, there’s only so many people searching for the type of key words for our service out there, so that’s one of them where … I mean, in the early days, for the first four years of our company, the only revenue we had, the only marketing channel we had were AdWords. It was slow and painful, but then we would focus on all the other fundamentals. We had a great site, really good, clear marketing message, good, clear checkout. Everything is working really great ’cause we only had this one source of traffic, if you will, but AdWords had a ceiling to it, and I think what we realized and struggled with was we were like, okay, well, what’s next? We need to find another way to continue to scale our business, and so yeah. We find that with every channel. You get in. If you find a winner … First you’re placing your bets, and you’re trying it, and you’re developing this channel. Then if it starts to work, then you’re like, okay, how high can I take this? You will reach a point of diminishing returns where you’re like, all right, this channel is only gonna be this. Unless I radically change something else, this is about all this is going to drive for us. We see that as we’ve grown.

Felix:What tools are you using to measure all of this in terms of response rates, repeat purchases? How do you tie all this data together?

Nick:我ean, analytics is huge. We look at analytics a lot.

Felix:Like, Google Analytics or which …

Nick:Yeah, sorry, Google Analytics. Google Analytics, we’re still really fond of here. If anything, we feel like Google Analytics is very conservative in their attribution, which we like. I’d rather be conservative than the opposite of that. So yeah, I mean, we use that. I mean, if we’re advertising, like we do a good amount of advertising on Facebook now. We look at the Facebook Analytics, as well, but we sort of compare that. We triangulate that with platforms like Google Analytics, as well. You’re looking at all that, and then, I mean, ultimately, I mean, now we’re looking at our Shopify dashboard, and that’s the ultimate test is what the actual sales say, but yeah. I mean, those are a few. We’re always looking at the analytics from the platform, itself, but then also using things like Google Analytics and our own financials to arrive at what we think is the actual truth. There’s not one that we’re sold out to where, like, well, this is the absolute truth. I mean, that’s kind of ridiculous. They’re all just trying to triangulate what’s happening.

Felix:Right.

Nick:We use each as a directional indicator towards what’s real.

Felix:Got it. You said that patience is your friend that lets you absorb lessons at your own pace and open doors happen by being in the game every day. I think this is such a great lesson here. What are some of the lessons that required a lot of time, just time in the game for you guys to learn?

Nick:通常,我想说我们绕着它, but learning how to use resources wisely. That’s something you hone when you have patience. Again, it’s something that I see missing a lot of times in companies that receive a lot of funding out the gate. They don’t know what they don’t know, and so they’re utilizing resources and 90% of it could be waste.

Felix:What do you see, especially store owners, wasting? What kind of resources do you see them wasting?

Nick:Well, I mean, both, money and time, so money and focus, meaning they’ll spend money on things that … And they’ll spend too much. If you have funding, I think the tendency can be to spend too much on tests and things like that when you don’t need to spend that much if you’re really just trying to gage the validity of something, so they’ll spend money up within time. They’ll chase shiny objects ’cause it could promise growth, but if you only have so many things you can do, you really think hard about which ones you’re going to do, and you might really ask a lot more questions about it, and so we’ve found that we’ll just do less, but we’ll do those really well and we’ll make sure that the more beforehand. And so because we don’t have … Even in time, we never …

In the early days, especially, it’s not like we have all these great talent that was around us. I mean, now we have a lot of great talented people, but in the early days, we didn’t, so it was only me and Adam. So you’re like, okay, if it’s only you and your co-founder, and you only have whatever, $80 to $100 a week between the two of you, you gotta choose wisely the things that you’re gonna apply your time to that are gonna make the greatest impact on the organization. That was the question we were always asking each other. I remember we used to get together with our notebooks at the beginning of each week, and we still do this from time to time. We’re like, all right. What are the three most important things you could do this week to have the greatest impact on the organization? ’Cause all this other stuff, as the owner especially, are gonna try to totally take you and distract you from that goal. It’s just the junk of running a business. They’re just gonna creep in from all angles, and so we found if we wrote down those three things, no matter what happened that week, if we got those three things done, we felt like we were accomplished, and then it also focused us in on what is the three most important things?

Felix:How often do you accomplish that, making sure those three things get done? How often is that? Are you able to do that?

Nick:Yeah, almost every time we take the time to write it down, we get it done. The irony of it is we get it done usually by, like, Tuesday morning ’cause it’s written down. Sometimes it doesn’t take that much time, but it must’ve been the most important thing that you do.

Felix:Can you share something that you have wrote down this week that you wanted to get done, or whenever the last time you did this exercise?

Nick:Oh, man. Let me think. I mean, we’re doing it a lot. I mean, there’s a new partnership that we’re working on that we needed to get some contract paperwork done and we had to review it and really put our minds to it to make sure that it was structured well.

Felix:How did you know that that was something?

Nick:How did we know it was the most important thing?

Felix:是的。

Nick:If we’re drawing a line, I think Adam and I talked a lot, Adam, my business partner, and I talk about drawing lines, meaning looking forward, are we even? Are we on a downward slope? Are we on a high slope? With the goal, of course, that you’re always growing, and so we’re trying to look at the trajectory of something and the potential of something, and usually that’s a good indicator of where we should be spending our time. That partnership has the potential to be very impactful to the organization, so we need to get that next step done.

Felix:Got it. So even before you write down these three things that have the greatest impact, you have to know what direction, what goal you have. What is the target that you’re going after? If it’s about growing the top line, then that can give you different direction than cutting expenses.

Nick:Yeah, no, absolutely, yeah. You have to have an idea of the objectives and the goals that you’re trying to achieve, and then just a good sense of evaluating the opportunities that are available to you ’cause there’s always gonna be a bunch of opportunities that you could do and learning how to evaluate those well is not an easy thing to do, but yeah.

Felix:As an organization, should the goal ever be different than just growing revenue? Why wouldn’t that just be the only thing?

Nick:是的。我ean, I think for a lot of organizations, that is the only goal. Yes, I don’t think that’s … No, I think you have to have an honest assessment of what your organization needs at that time. For example, I mean, one of the benefits to not having investors is that we don’t have the external pressure to consistently grow. We have during seasons of our business where we know we’re pushing growth too hard and we need to give ourselves a little more margin to maybe take care of the organizational needs that are there. Maybe the most important thing that week has nothing to do with growth. It might have to do with training, or management, or some sort of culture or human resources type thing, an organizational type goal. I mean, it’s whatever the organization needs at that point. I mean, I think that’s the other benefit if you can be patient is that way you can respond to the needs of the organization, whatever they are, not simply be pushing growth to the detriment of, or the neglect of, anything else that your company might need.

Felix:Right. I think you guys are great example of patience because it took you five years to start hitting scale.

Nick:Right.

Felix:And you mentioned those first years are slow, but your grade is proving grounds. What made you guys stick it out for five years? I think that’s a long time for people to stick to anything, even if they have some success, but if you’re going slow for five years, what was that like?

Nick:I think we had hard conversations all the time, like is this worth it? Should we continue? Should we double down? I know Adam’s aspirations when he was in college was to be a lawyer. I know his parents were always talking to him like, when are you gonna go to law school? When are you gonna get a real job? I was married and my wife was the primary breadwinner for our household. She was infinitely patient. She seemed to think everything would be fine, which is amazing. So she didn’t apply any pressure, but I felt enough of it, myself, so I think that’s tough. I don’t have a good answer on that.

I think we stuck with it because there was enough possibility still there that we felt we owed it to ourselves to keep exploring. We knew, like, we would see indicators that would show us that I think there’s more here. We just haven’t quite found it yet, and so we kept at it for a while. That’s how we could keep doing it every day and keep deciding, yeah, yeah, this is still a worthwhile thing. What’s funny is after that, once we really hit our stride, once we sort of uncovered some of those paths to growth, I mean, that’s where we grew 1,200% in two years, so it was two and a half or three years, I suppose. Anyway, it was crazy. It was a lot of preparation, preparation, but it wasn’t wasted time, I guess is my point. We had actually honed this model so tight that it was ready to scale. I mean, it was just waiting to strap another engine on there and this thing is ready to roll.

Felix:What was that? What was that event that [inaudible] hockey stick moment where it was in a [inaudible] point and things just took off?

Nick:是的。I think it was realizing that, like I said in the beginning, we didn’t realize we were sort of this direct to consumer model or we were this eCommerce model. It was just something that we naturally went to. I think when we really embraced that, we were like, hey … I mean, at the time, when we were in those five years of slow growth, we’re trying everything. I mean, I was like going door-to-door. Maybe we needretail distribution. I mean, like, all these out there crazy things that were a waste of time at that time. When we finally just said, “Hey, we should embrace that we’re eCommerce retailers and look to what other great eCommerce companies are doing and see if they apply to our business,” that’s when we realized, yep, they do, and then we just started growing like crazy. Yeah, it was like a mindset. It was like a mind frame switch to go, we are a direct to consumer eCommerce company. Let’s do what other … And then we started looking at other people for inspiration and starting applying those principles to what we were doing, and it worked extremely well.

Felix:What are some of your favorites, in terms of eCommerce, I guess, role models that you guys looked to?

Nick:Oh, I don’t know. There’s a ton of great companies out there. We were looking at new ones all the time. I just bought this deodorant from Native. I think they’re doing a great job. I don’t know how their business looks, numbers-wise, but I was converted. They have a really great … I was screen-capping some of their early clever things they have on their product page the other day and sending them to somebody that I liked. So I mean, there’s ones like that. I think, I mean, all the ones that people would be familiar with. I mean, I have all the trendy stuff. I have the weigh luggage. We have Casper mattresses. We’ve got Harry’s razors.

Felix:Wow. Yeah, you really do.

Nick:All the trendy things. I do it because I feel like it’s a little bit of research.

Felix:是的。

Nick:I’m like, hmm, I wonder what their packaging looks like. I wonder what their customer support is like. I wonder how they do this.

Felix:I’ve definitely bought products that I did not actually want to because I felt like they had a really good marketing funnel. I want to see how far it would go, so definitely-

Nick:Right.

Felix:So you mentioned … Talk about the percent in three years was when that mind shift … That was a result of the mind shift that you guys had, mindset shift that you guys had. Can you give us an idea of the growth at a company these days of how much has it grown to?

Nick:Sure, yeah. I mean, we’ll do a little over 20 million this year in revenue. At our peak seasons around our holiday seasons, we have about 200 employees. There’s some seasonal people in there, so it’ll settle out around summer time when it’s our slowest time at around 150–160 employees. We continue to grow at a pretty good rate, so yeah. I mean, we’re doing a lot these days.

Felix:So you guys have your peak season. Do you guys have a peak during the holiday shopping season? This is a kind of product or service that people purchase during that time?

Nick:It is. I mean, it’s pretty strong all year-round, so it’s not a seasonal business. It’s strong year-round. I would say that there’s … And this might be similar to a lot of eCommerce. There’s a huge spike in sales around the holidays starting with Thanksgiving through December.

Felix:I find that that’s probably the time where people are looking at their old videos, right, or something?

Nick:Yeah, I think so. I mean, obviously, everybody is getting together with family members and things like that, so you’re kind of feeling nostalgic already. These are good family-oriented holidays, so it makes sense that you could give a gift like Legacy Box around those times. The crazy part is we actually sell a good portion of Legacy Boxes, which means we ship these mailing kits to everybody. We’re just shipping truckload and truckload of these empty kits, these Legacy Box mailing kits to everyone, and then we actually feel … The production team feels the impact of that into the new year, so January and February is when we’re having to process it all. We will get it as waves. We have two waves. Our customer service and marketing is like the first wave, and that’s in November-December. Our production team is feeling the second wave, which comes January and February.

Felix:Now, do you notice during that holiday shopping season, the marketing channels are shifting, or does it stay the same, just [inaudible] overall?

Nick:是的。我ean, for us, we kind of feel like geniuses going in to that time of year ’cause almost everything seems to just work a lot better. There’s a little bit of a high there where you’re like, oh my gosh, everything is working so great, but then January rolls around. You realize, oh, yeah, that was … That was ’cause it was the holiday. We’re not as smart as we think we are. So yeah, everything works a lot better. There are some channels that become cost-prohibitive, and you don’t do them as much during that time of year, too. Facebook comes to mind. It’s a pretty competitive marketplace. A lot of huge brands come in to Facebook coming into Q4, and so yeah. That can drive costs up where it doesn’t make sense to do it around the holidays, but then you can kind of resume when things settle back down. Yeah.

Felix:I want to talk a little about the website. Any particular apps that you guys rely on to help run the business or run the website?

Nick:Yeah, like plug-ins on our Shopify site?

Felix:是的。

Nick:是的。我ean, we use Yotpo. I mean, that’s great for reviews. That’s a really important thing to us so we can showcase some of those customer experiences on our site and help drive conversion. Justuno is an important one for us ’cause we can display different promotions live on the site, depending on where the traffic source is coming from. Justuno is great. We use this thing called Crush.pics, so I mean, just helping to keep good site speed, which is really important. We’ve learned this lesson where we’re like, we were [inaudible] and adding all these cool features to the site, cool features to the site, and all of a sudden, it’s getting sluggish and our conversion rate is suffering as a result, so making sure we’re always having a fast site are important. So, I mean, those are a few. We use a bunch. We test a lot of them, but we try not to use any that aren’t necessary, just because we just want to have the cleanest code and cleanest site speed that we can have. Yeah, those are ones that come to mind.

Felix:Is that because you’re seeing more mobile users? Is that a certain shift that there are actually even more these days?

Nick:Yeah, so this isn’t necessarily a plug-in, but I think a really critical piece and actually really great thing since we’ve transitioned all of our sites to Shopify has been site speed, but then reliability. That’s huge. I mean, when we had sort of a hodgepodge of our own different things running it every … There’s like always something that felt like it was going wrong. When you’re driving the amount of traffic we are, that’s incredibly painful to experience that, so the reliability, but then you talk about mobile and I think of payment options. The Shopify checkout with the ability to have all these really easy mobile payment options has been a really important piece for us, and so yeah. I think we’re seeing … We continue to see a big shift to mobile. I think, obviously, everybody does.

Felix:Right. Is there a reason why you would not just add every single payment option possible?

Nick:No, no. There’s no reason that I can think of. I mean, we just keep adding them if we can. The only weird part is just … I mean, we had to work with our finance team and then our actual production team to make sure that we, like, pass through all the data correctly because for us, we’re doing a service, so people are sending them in. We have to do all this stuff and then actually ship out this completed service and product back to them. So, we need to make sure we’re passing along all that information correctly and even all the payment information through correctly. When we add payment options, it gets a little bit more complicated, but for us, it’s totally worth it. I mean, if we can make more sales, I’ll figure out all the other details.

Felix:Right, so you would never see conversions going down by adding a payment option?

Nick:No, we’ve never experienced that. The more options, the better, we found.

Felix:What about the actual design of the website? You sound like you guys worked with outside agencies built it?

Nick:是的。We have. I mean, my background is in design. In the early days, I designed all of our website, and then we have our own design team now and development team in-house, so we still shoulder a lot of it, but yeah. We’ve used outside agencies to sort of supplement that, as well. Yeah, I don’t know. I mean, I think the biggest thing that we’ve learned in our journey of web design and eCommerce has been clarity, clarity of message, clarity of what actions you want the customer to take, clarity of your value propositions, just a lot of clarity. I think in the early days, we’ve wanted to stride to be clever, and funny, and cute, but the more clear we strive to make the message, the better.

Actually, we think that’s really respectful of the customer. I mean, if you think about the way you browse the internet, you’re constantly just scanning things and processing and going, am I in the right place or not? You’re making a snap judgment, and so if you keep that in mind, people live noisy lives. You kind of need to cut to the chase if you’re trying to sell them something online. So yeah, that’s been our biggest evolution as we look at the design of the site with the respect of the customer in mind. Let’s strive to be as clear as we can with what we’re trying to provide them.

Felix:Is there something that you removed recently or in the past that has made a big difference in that regard?

Nick:It’s hard to say. I think it’s just been through a lot of subtle details, the language in the copy that we’re using. Yeah, nothing that pops into my head off the bat on that one.

Felix:Awesome. Thank you so much for your time, Nick. Legacybox.com is the website. Anywhere else that … I guess, where do you guys want to see the company go over the next year?

Nick:是的。我的意思是,我们继续to see a trend in helping people digitize their items and store them in the Cloud. We continue to do that. Most market research shows this market quadrupling over the next decade. There’s literally billions of these things out there, and people are now just discovering that, hey, my VCR doesn’t work, so I need to figure this out. We feel really great about what the future holds, and then we obviously see that transition to the Cloud being a natural one, so there’s a lot of great opportunities on the horizon.

Felix:Awesome. Thank you so much for your time again, Nick.

Nick:Thank you so much for having me, Felix.

Felix:Thanks for tuning in to another episode of Shopify Masters, the eCommerce podcast for ambitious entrepreneurs powered by Shopify. To get your exclusive 30 day extended trial, visit shopify.com/masters.