Normally, when Howard sees people buying businesses or Amazon businesses, they don't actually know what they're doing, and a lot of them usually fail. This is because they are actually on like a mass scale where they are buying businesses, left and right, and they actually can't scale it. So for this podcast episode we have a very special guest to talk more about the value of Amazon businesses: Ken Kubec. Ken does a lot of purchasing of Amazon businesses or brands. He has analyzed over 500 Amazon businesses and purchased over 50. His company is doing great at valuing Amazon businesses, and now, they are acquiring five to 10 Amazon businesses a month. In this episode we learn more about Ken Kubec, his company, and his very interesting strategy on Amazon.
Topics Covered In this Episode
First ever Inagural Professor'S Pandemic Event
It's going to be in the end of the month of June: June 29 - 30
Introduce Ken Kubec
Who is Ken Kubec, what does he do, and why is he the man? What do you consider is your the most foremost expertise?
Ken Kubec's Edge
How do you think outside of the box compared to other experts in your field? How are you different than them?
TOPICS THAT YOU WILL TALK ABOUT IN HOWARD'S PROFESSOR'S PANDEMIC EVENT
Benchmarking your business, what we're seeing across the Amazon marketplace, and some tips you can use on your Amazon businesses
Biggest Mistakes of Amazon Sellers
What are the biggest mistakes you see that people make when selling on Amazon?
Problems Amazon sellers have right now in 2020
Like what problems do you see as a result of the pandemic?
what opportunities do you see for the sellers?
What particular actual niches do you see that there's a ton of opportunity if you're either already selling in them to scale or if you're brand new and you want to get started?
Suggestions for new sellers
How would you suggest them to structure their business or structure how they operate?
lEARN MORE IN THE FIRST EVER INAGURAL PROFESSOR'S PANDEMIC EVENT
We’re here to educate and hope that anyone can come in and join us on the PPE event
The Professor's Pandemic EventAre You an Elite Seller Ready To $CALE from 7 or 8 to 9 Figures?
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[00:00:00] Welcome to the Professor’s Podcast where we discuss the best strategies to massively improve the reach and bottom line of your business in the current virtual and economic landscape. Your host, Howard Thai, generates over $5 billion for his clients annually using innovative tactics, both on and off Amazon.
[00:00:21] Hey everyone, Hurricane Liz here back with another episode of the Professor's Podcast. And here as usual is my co-host, the man, the myth, the legend, Mr. Howard Thai. And Howie, I know we've got a very exciting guest for today's podcast, and I do want to remind everybody that what we're doing here is we're showing off, almost.
[00:00:41] We're showing off Howie, you see you're very humble man, but you are bragging about this. You've got the best of the best in terms of speakers coming up with, at your actual end of the June event. The Professor's Pandemic Event is the first ever online virtual event that you'll have, which people can attend from the comfort of their very own home.
[00:01:01] And you have combed the entire globe to meet these guys to get to know them better. And you literally picked out diamonds in the rough. So you want to tell us a little bit about the exciting guest that we have on today and a little bit more about your excitement for your first ever online virtual event?
[00:01:19] So the guest that we have today is Ken Kubec. Have I said it correctly, Ken? So he does a lot of purchasing of Amazon businesses or brands. So I really thought that his company, what they do, stand for, is really interesting because normally when I see people buying businesses or Amazon businesses, they don't actually know what they're doing.
[00:01:45] And a lot of them, they kind of fail. And they're actually on like a mass scale where they’re buying businesses all left and right and they actually can't scale it. And it looks like they have a good team to be able to, you know, bring it up to another level. Usually like a lot of these PEs or these restaurant businesses, companies that comes in and buys it really doesn't really do that great of a job.
[00:02:08] So this is one of these companies I see that does a fascinating job at scaling. So that's why we brought him here and I met him in another mastermind that one time. So I thought that he would be a great guest on our show for our mastermind, for the event, it's going to be in the end of the month of June, I believe it's the 29th to the 30th. So let's see how many people we can get in and everyone to see how much knowledge that we can show everyone.
[00:02:41] Absolutely, and I just want to remind people again, Howard said it's at the end of June, the 29th and 30th and I'll give you guys details on how you can actually sign up for the event. And also wanted to just remind you, I've actually been to approximately six of Howard's events, and I will say this, I've learned so much and executed so much of what I've actually learned there, that it's actually created a valuable Amazon business for me.
[00:03:05] Made friendships that I can only imagine are going to last a lifetime. And the knowledge that I've taken there has taken me to a whole other level and I'm thankful for that. But typically at the actual live events, they cost as much as $12,000 per piece. I'm lucky I get to emcee them Howie, so that to me is
[00:03:26] The most awesome thing in the world. But I am especially excited for this one because for the first time ever, as I said, you can attend it live from your house. You can be in your pajamas just like I am right this moment, and you can be doing whatever it is that you want to do while you listen to the best of the best, drop their knowledge bombs on you left and right.
[00:03:45] And you also get to interact with these guys and ask them questions. So I am super stoked for that. I'll be emceeing it live from my pajamas as I'm pretty sure people like Ken will be also. Making presentations live from their pajamas. So without further ado, let's meet this man Ken who has a very interesting strategy on Amazon.
[00:04:04] As Howard said, he buys Amazon businesses with the intentions of making them better, and we'll find out more about his end goals as well as a lot of other great things. So Ken, I've heard a lot about you already from Howard. But what we usually like to do with our guests is we like to tell them, let's just pretend you're on an elevator with Howard, and obviously, you know, he is the man, the myth, the legend, featured in Wall Street Journal and Buzzfeed news and all sorts of crazy publications for all the things that he does on Amazon.
[00:04:34] And you're pitching him that you are the man and that you want to speak at his pandemic event. Give me your two minute elevator pitch on who Ken Kubec is and why you are the man. Yeah. So Liz, I wish I had a high person like you to answer all of my calls. So yeah, I've spent, before Amazon, I spent 13 years in investment management and investing hundreds of millions of dollars in public companies.
[00:05:04] So, you know, investing is near and dear to my heart, analyzing businesses. I joined Thrasio 18 months ago as the eighth employee. Since then I've analyzed over 500 Amazon businesses and purchased over 50. So I think when it comes to selling your Amazon business, I've seen it all. I've heard it all. I probably looked at at your business at one point or another.
[00:05:29] And you know, we're just, we're building a great operating platform and at this, at the rate we're at now, we're acquiring five to 10 Amazon businesses a month. Wow. So what do you consider yourself the most foremost expert in regarding on this, in your business? Yeah, definitely. So, valuing Amazon businesses, right?
[00:05:51] I mean, we've seen, we've, we've purchased businesses that are steady. We’ve purchased businesses that are growing over 150%. We've also looked at businesses that were struggling and needed a capital infusion to turn it around. So I think in terms of looking at a business, benchmarking your Amazon business versus other successful sellers, is, is something.
[00:06:12] And we do it internally when we look and make an assessment on business. So again, I've looked at over 500 profit loss statements, revenue trends, and new product launch trends and to talk to a consultant. When we have these initial conversations with sellers, we really talk through what's been successful, what hasn't worked, you know, I know all the software that all use.
[00:06:36] So you talk about having the masterminds of the greatest sellers like we only look at businesses that are doing over a million a year in revenue. So it was kind of the top five 1% of Amazon sellers. And I get basically an inside look and how they run their business and the successful strategies as well.
[00:06:56] So let's say that you, you know, there's a lot of other companies out there that buys companies and tries to do the same business model as YouTube grow them. And what, what do you, what, what, how is it different from what you, what you do and do you see there, what they are. In general, like how, how are you different than them?
[00:07:16] Yeah. Look. Hands down, our operational team. We have over 250 people at our company now in the US we have, Boston, New York, Houston. We have an office in Manila and Pakistan as well. So, you know, the way we're structured is we basically looked at, okay, what is it? What does it take to be successful as entrepreneur
[00:07:41] in Amazon. Right? I mean, it's everything from negotiating with suppliers to managing your cashflow, to writing creative content to photography and videos, to driving traffic on Amazon sponsored ads or other ad formats within Amazon's ecosystem, driving traffic off of Amazon to Amazon. So we've actually built our entire company around.
[00:08:07] Operating and scaling Amazon's brands, which means, so we have functional expertise in our supply, our supply chain or how our supply chain ran a $2 billion sourcing P and L, Maersk, which is the largest global shippers. So we kind of looked and you know, every entrepreneur has that, every human being has deficiencies, right?
[00:08:30] Particularly when it comes to business. I have blind spots. Things I'm not really good at, and there's things that I'm really good at. So every entrepreneur has that same skillset, you know, strengths and weaknesses. What we've done is, we've crafted this platform that plays to all the strengths required and at the highest level, right?
[00:08:51] So we're talking earlier, right? Like Amazon SEO, like some people are probably good at it and they know how to rank. but have Casey Gauss, the founder of our launch now running Amazon SEO for all of our brands. So when you line all that, there's a lot of efficiencies to be gained. And then also, when you think about, you know, just the ever changing landscape of Amazon and how you're successful and the steps required because we have an entire platform.
[00:09:24] Once we figure out how we should be doing this, we can roll that out across our 50 plus brands, basically in an instant and achieve that efficiency game versus, you know, one seller that you have somebody managing a few brands when they bought a few brands. They're constantly putting up flyers and we've just really institutionalized the entire process.
[00:09:45] We have probably five or six in-house attorneys that are just strictly focused on, Oh, there's a bunch of a few of them that are strictly focused just on IP and the pending IP, et cetera. So yeah, I think that's, you know, our entire company is built around running Amazon. I think that's where we differentiate.
[00:10:04] And then just the scale and what we've learned. It's not easy. So Howard, you mentioned people just want to think it's, you know, it's a path to riches and it's a four-hour work week. And I always laugh when I hear people say, Oh, I spend five hours running my Amazon business. Yeah, it took you three years of sleepless nights and spending 40, 50 hours a week to get to that point.
[00:10:28] And so anyone that's thinking of buying an Amazon business, you know, and they don't have that experience, don't oftentimes realize that it's a full time job and it requires immense detail and perseverance. You know what Ken, you've got a very unique actual perspective on the whole Amazon thing, and like you said, you're not the one that actually runs the SEO or does the ranking and strategy, which is kind of what a lot of our actual speakers so far are experts in.
[00:10:58] But like I said, you provide a really unique perspective that nobody else has thus far in all the interviews that I've had, Howie have done. And so I think with that being said, you're going to be able to provide a really unique perspective in what you actually talk about. So give me an idea of the three to five topics that you think you could talk about during this event that would absolutely wow people and.
[00:11:21] Make them like really raise their eyebrow and learn something that they never heard of before. Definitely, a talk about benchmarking your business so as you, as you move down a P and L, what your business should look like, what your margin profile should look like, what's attractive to sellers, what's attractive to buyers of Amazon?
[00:11:41] You know, obviously if you're thinking about selling. How to think about valuation, how to get your business ready for sale, right? I think there's a misconception of you got to spend three to six months getting your profit loss statement in order. And there's all these, you know, it's, it seems like a very daunting task to get your business ready for sale.
[00:12:00] I would tell you that it's, it's not daunting, but it can be done. You know, we can assess things in a few days without heavy lift from this, the seller, the sellers in advance of that, and then also look at what we're, what we're seeing across the Amazon marketplace. So, you know, we're basically a mini Amazon ourselves, right?
[00:12:19] Kind of a mutual fund grants we acquire across numerous categories. Solely, you know, just acquiring an old kitchen or sports and outdoors or auto work. We're across the board, so across $51 million plus brands, we get to see a lot. We know what's working, what's not working. There's a lot of knowledge, you know, I'm definitely going to talk a lot with our team internally and figure out the nuggets and value that we can add to the attendees.
[00:12:51] Absolutely. I gotta be honest with you, everything that you said there, I'm excited to hear what you have to say about it because as someone that you said, you've looked at over a hundred P and L statements, and I don't know if you said that was just
[00:13:07] 500, was a hundred a month, so I was already, well, totally didn't even hear the rest of it. With that being said, what are the biggest actual mistakes you see that people make when they're actually looking to sell? Yeah. So I think the biggest is timing. And this is something that I think a lot of people don't talk about when they actually discuss scaling Amazon businesses.
[00:13:32] So, you know, I always encourage sellers when I talk to them like, know what your ceiling is on your existing brands and products. And you know, you might've watched a product that's in a super small niche, and maybe you actually, it's, there's a physical limitation of growing it to a million dollars right.
[00:13:52] So don't sit there and think you're going to get us to 2 million. You have to look at your existing product set and calculate how big can this get? The leader has 30,000 reviews and the second place has 20,000 and you're just starting out. Look, you're not going to get to a top five market share in that niche.
[00:14:11] So you don't have realistic expectations. And then I say, you know, it's like having planning to have kids or getting married. There's no perfect time, but you know, what's the best time for you in the moment? And I always tell people that you got to focus on, it’s often the best time to sell is when things feel really great, right?
[00:14:34] Because you don't want, you don't want to run the risk of the business plan towing. And then starting to decelerate, and then you're selling from a position of weakness. So you know when your sequential monthly growth rates are increasing, that's often the best time to sell because the buyer wants to also look and know that they're purchasing future upside, right?
[00:14:58] And then there's things that they can do to prove revenue growth or the profitability profile of the business if everything is completely optimized. And you know, you've scaled at the 5 million and then you just been running at that level, you know you're going to get more value. If you're selling it for a million and the seller knows they can grow at 25 30% expand margin.
[00:15:21] So, you know, it's timing is it's tough to actually predict and second you just want to do what's right for you and really try and maximize your value. How many did you say, I forget, how many companies or brands do you own right now? Over 50. Yeah, it'd be double that by the end of this year. So within that 50 what is the GMV on the total scale?
[00:15:50] The sales? So we'll, we'll, we'll be over, say we'll be over 250 million. Oh yeah, this quarter, 250 million. That's a lot. So I also wanted to ask you, what kind of problems do you see Amazon sellers having right now in this 2020 pandemic times now.
[00:16:15] Yeah, I mean, look, inventory, cashflow management, and you had started with the supply chain issues in China, the Chinese new year, and then rolled into the foreign center, issues here in the US which are still lingering. Right. So I think that that's been the biggest issue.
[00:16:40] People had stockouts and now you have a situation where you're starting to plan for prime day.
[00:16:51] So I think, honestly, the biggest issue people have is how they're managing for this year’s pulled forward demand that's happened on the Amazon marketplaces and really trying to figure out, is this the new normal? What is the new normal? We have brands and what we've looked at brands that are up, you know, three, four or 500% year on year, beginning of the March period where you're trying to figure out.
[00:17:20] Hey, should I be planning for this to continue for the next six months? The next 12 months is this, you know, did, did we just shift forward three years market share for Amazon e-commerce from physical brick and mortar? So I think the unknowns are so great right now, and if you don't have, you know, the capital or just the experience to figure out what's, what's real, what's not.
[00:17:50] I think that's, that's a big struggle that sellers are having. I think there's opportunity, right? It's conversely, if you're in a category that's been hit such as auto, nobody's driving so people aren't investing in their cars. I mean, I think that's actually category that comes out. We bounced strongly out of this as exiting a recession or in a recession.
[00:18:17] People hold on the cars for long. They actually do invest in their cars. We saw that in the US after 2009, 2007 especially, there was a much longer used car cycle. So you have to think through that. And then, you know, just navigating the short term. You know, kind of uncertainty is obviously the biggest issue, but then there's also a lot of opportunity, right?
[00:18:40] We're aggressively advertising and trying to take share because we have capital and the ability to invest in our brands right now and get higher ranks and try and drive the Amazon flywheel for a lot of our products and back when fulfillment normalizes. And you know, Ken, going off of that, I know that you mentioned that there was obviously a lot of problems.
[00:19:09] But yet a lot of opportunity. What particular actual niches do you see that there's a ton of opportunity if you're either already selling in them to scale or if you're brand new and you want to get started? I think you have to study the market, study
[00:19:30] yourself and human behavior right. Are people starting new hobbies? You know, I haven't had arts and crafts, a perfect example,right? We've seen great demand from a few products and brands that we have in that space. So things at home for the kids is this, you know, I feel like this is going to be a great.
[00:19:49] Roll back summer for a lot of people where it's, you know, everything is over structured for kids now and now kids are going to be, you have to figure out what to do to play around the neighborhood and things like that. So what opportunities are there in that? And there's oftentimes, you know, it's, it's the second order effects of things.
[00:20:08] That you really, the longer that we're in this kind of, you know, at home, et cetera, behavior starts to change, right? Like commercial office space. What's that look like at home? Everybody's breaking the phone. Everybody's got two monitors at home, standing desk, screens, microphones, all that stuff's going to continue to increase.
[00:20:33] So I think you really got to study the macro environment and really do some research, read a lot, figure out how this is going to change society, and you know, kind of skate to where the puck is going, not where it's at right now. You know, outdoor furniture people, right? You could have a huge thing where people start to figure, you know,
[00:21:00] this is going to be a roll or maybe this is a rolling thing where people have to live in their homes for 90 days on end and you know, they really start to invest more in their homes and, Hey, maybe I need to refresh this or.
[00:21:14] Redo this, let's invest in their backyard versus going away on a vacation for two weeks every year. I think there's tons of opportunity that's coming out of this. And then if you're, you know, unfortunately if you're in an unfortunate position where your products and categories are ones that are hardest, you know, if you, if you have the capital and the fortitude, I think it's going to be a great opportunity to take market share because a lot of sellers on Amazon are in for the quick hit, kind of come and go pretty quickly and feed that staying power.
[00:21:46] There's gonna be an opportunity to gain a lot of market share. As your competitors fall off stock and don't feel like replacing the POS because the volume is not there. So I know a lot of audience here would probably like are interested in like creating businesses on Amazon because you know a lot of, we've got a high unemployment rate right now, so we want to, I'm sure a lot of them are thinking about selling online or doing some kind of online business as well as we know, like.
[00:22:19] They're getting used to. I'm staying at home right now, having this more of a more freedom and stuff. And as well as more buyers are buying from Amazon, like bill, like we were talking about, I think I read somewhere that Amazon, Jeff Bezos like going to be the first trillionaire or something like that.
[00:22:37] So, so like for the pandemic, he made like four or $500 million off of this. So there's a lot of the Amazon or the eCommerce is growing so. For those people out there that are interested, what, what, how would you suggest them to structure their business or structure how they operate in order for a kind of like to sell or could sell so that they don't have to backtrack. The biggest thing is by
[00:23:09] keeping it as a separate, not co-mingling it, right. Like set up in a, you know. The easiest is to set, set up US-based LLC that often times, you know, the biggest buyer pool is in the U S so deals typically are structured as asset purchases. So we kind of buy everything out of the LLC for that brand. So we're not, we don't buy the LLC or the company.
[00:23:35] We actually just purchased all the assets out of that company. So you set up a US-based LLC. If you can just run it, run it as a business, so have it, have a separate credit card statement, have a second separate banking account. Really, don't co-mingle the financials. If you, if you, if you run multiple businesses, you know.
[00:23:56] So list it in Amazon for separate accounts, if they're different categories, et cetera. Kind of just try and keep it really tight, really clean so that that handover and the ability to make sense of the numbers and all the expenses in the business are easy for the buyer. That's, I mean, just keep it simple.
[00:24:19] Run as, you know, as a business. Keep, keep the end in mind if you don't want to. So I think there's people that don't want to sell me the lifestyle business, right? They're happy with the cash flows that was throwing off. But oftentimes you start to actually peel back the onion and you know, people will say, Oh, my business made $500,000 in profit last year on paper.
[00:24:39] And then I'm like, well, how much did you actually pay yourself and take out of the business? And they're like, Oh, maybe like 50,000 because they're continually investing in inventory and working capital to scale the brand. So I think it's just knowing what your end is and then kind of working back to the beginning and just setting yourself up for that potential exit.
[00:25:05] Great. So, any last words to our audience before we wrap it up? I'm, look, I'm excited to hear all the other speakers as well in the mastermind, and I think there's no better time to be a seller on Amazon either if you're, if you're just starting out or
[00:25:25] the ones you know that I've seen come across our desk are the ones that treat it like a real business and not get rich quick scheme. So I can just attest that the psyche, you know, the people that treat it as a business are the ones that are oftentimes the most successful. Amazing. Thanks so much Ken, and I just have to say, like I said, you were the most unique interview we've had thus far because of your unique skillset and pretty much I think everybody that's listening would agree with me.
[00:25:55] You can speak about whatever you want. We are ready to listen, so thanks so much for joining us. And Howie, how excited are you about Ken's speech at the event at the end of June? I'm still deciding which topic we should have him talk about because it's so big, so much things that he can really teach us about his business.
[00:26:16] Absolutely. I'm thinking we just let him go with it. Come up with whatever he wants, because pretty much every single thing that he said is pretty much on my list that I'd like to hear about. So it's almost a let him pick, let him decide whatever it is he wants to. unleash on, on us and on the crowd that joins us.
[00:26:34] So I'm super stoked. I know Howie is too. Any last words from you Howie, before I let people know the details and how to actually attend? There's always a man of few words, but as I said before, he is the man, the myth, the legend when it comes to talking about Amazon. He will go on for hours and hours and hours.
[00:26:54] His wife can attest to that, but when it comes to anything else. He's a man of few words. However, he will be a man of many words at the end of June on June 29th and 30th at the first ever online Professor's Pandemic Event. And I just want to remind you before we say goodbye here, typically this was held live and it's a $12,000 per person event. But this one time only, we are going to make it very affordable for everybody that either has.
[00:27:21] Already an existing Amazon brand that is crushing it or people that are just getting started. The Professor has decided that he wants to expand the people that actually listen to them and expand his level of knowledge as well as every single person who is speaking of global knowledge to everybody that attends.
[00:27:39] So if you want to attend, go to a9mastermind.com/ppe to get more information. And other than that, I want to thank everybody for joining us on this episode, and I personally, and I know Howie does too, look forward to hearing Ken’s speech as well as one of the other 15 speakers. Again, who knows how much the combined earnings a year are of these speakers at the last Mexico mastermind.
[00:28:03] Right. The combined yearly earnings was over half a billion dollars. I think Ken alone is going to take that almost even to the billion dollar mark. What do you think that could be? Good could happen? Because last time I think it was like I talked about before, we had like a six hundred fifty thousand, six hundred and fifty million dollar a speaker that was speaking at our event.
[00:28:24] So just that one person. I bet you on that crowd, that one, that one mastermind event there was.
[00:28:36] Yeah, that's just a, that's just pretty much every day for the Professor’s. So again, I look forward to seeing you all at the event, June 29th and 30th to find out more information, go to a9mastermind.com/ppe and thanks again for joining us. We'll see you later. Welcome to the Professor’s Podcast where we discuss the best strategies to massively improve the reach and bottom line of your business
[00:28:59] In the current virtual and economic landscape. Your host, Howard Thai, generates over $5 billion for his clients annually using innovative tactics, both on and off Amazon.